Republic of the Philippines

Bangsamoro Autonomous Region in Muslim Mindanao

Ministry of Basic, Higher, and Technical Education
(MIT) MINDANAO INSTITUTE OF TECHNOLOGY, INC.
Pumping Street, Barangay Bubongamarawi, Marawi City, Lanao Del Sur

FINAL EXAMINATION SET C

ADGEC 2 – Basic Economics, Taxation, and Agrarian Reform

1. The law of supply states that, all else c. Supply of a good to changes in its
being equal, as the price of a good own price.
increases: d. Supply of one good to changes in the
a. The quantity supplied decreases. price of another good.
b. The quantity supplied increases.
c. The quantity supplied remains 6. An increase in the price of a substitute
constant. good will:
d. The supply curve shifts to the left. a. Decrease the demand for the original
good.
2. In a perfectly competitive market, b. Increase the demand for the original
individual firms are: good.
a. Price makers. c. Have no effect on the demand for the
b. Price takers. original good.
c. Market leaders. d. Decrease the supply of the original
d. Regulators. good.

3. When a firm experiences diminishing 7. Marginal cost is defined as:

marginal returns: a. The total cost of producing all units.
a. Each additional unit of input increases b. The cost of producing one more unit.
output by a larger amount. c. The average cost of production.
b. Each additional unit of input d. The difference between total cost and
decreases output. total revenue.
c. Each additional unit of input increases
output by a smaller amount. 8. In the short run, a firm should continue
d. Each additional unit of input has no to operate if:
effect on output. a. Total revenue exceeds total cost.
b. Total revenue equals total cost.
4. A monopoly is characterized by: c. Total revenue is greater than variable
a. Many sellers and one buyer. cost.
b. One seller and many buyers. d. Total revenue is less than fixed cost.
c. Many sellers and many buyers.
d. Few sellers and many buyers. 9. Which of the following is not a
characteristic of a public good?
5. The cross-price elasticity of demand a. Non-excludability.
measures the responsiveness of: b. Non-rivalry.
a. Demand for a good to changes in its c. Excludability.
own price. d. Shared consumption.
b. Demand for one good to changes in
the price of another good. 10. Price discrimination occurs when:
 a. Different prices are charged for 17. A normal good is defined as a good for
different goods. which:
b. The same price is charged to all a. Demand increases as income increases.
consumers. b. Demand decreases as income increases.
c. Demand remains constant as income
c. Different prices are charged to
increases.
different consumers for the same good. d. Demand is unaffected by price changes.
d. The price is set by the government.
18. Price elasticity of demand is calculated as:
11. A firm's demand for labor is derived a. The percentage change in quantity
from: demanded divided by the percentage change
a. The supply of labor. in price.
b. The firm's production function. b. The percentage change in price divided by
c. The firm's revenue. the percentage change in quantity
d. The marginal product of labor. demanded.
c. The change in quantity demanded divided
by the change in price.
12. When a firm operates under
d. The price change is divided by the change
monopolistic competition, it: in quantity demanded.
a. Faces a perfectly elastic demand curve.
b. Produces a unique product with no close 19. The ultimate link to the consumers in this
substitutes.
system is the
c. Faces a downward-sloping demand curve.
d. Has significant barriers to entry. a. Retailer c. Both A and B
b. Wholesaler d. None of the
13. In the long run, a perfectly competitive firm above
will earn:
a. Positive economic profits. 20. The purpose of advertising is to
b. Zero economic profits. a. Convince and sell c. Make publicity
c. Negative economic profits.
b. Give discount d. Inform and
d. Supernormal profits.
persuade
14. Opportunity cost refers to:
a. The cost of an alternative that must be 21. The following are kinds of market structures
forgone to pursue a certain action. except one:
b. The monetary cost of production. a. monopoly b. duopoly
c. The cost of labor and materials.
c. tripoly d. monopsony
d. The cost of capital goods.

15. Consumer surplus is: 22. Considered as the founder of modern

a. The difference between the highest price a macroeconomics
consumer is willing to pay and the price they a. John Maynard Keynes b. Economics
actually pay. c. Government Section d.
b. The difference between the lowest price a Microeconomics
producer is willing to accept and the price
they actually receive.
c. The total amount spent by consumers. 23. The market value of all final goods and service
d. The total revenue received by producers. produced within a given period of time by
factors of production located within the
16. If a firm's total revenue is less than its total country
variable cost, it should: a. Gross Domestic Product b. Net National
a. Continue operating in the short run. Product
b. Shut down immediately.
c. Gross National Product d. GDP per
c. Increase production.
d. Decrease production. capita
24. Cost does than not change as output increases. 31. It is concerned with the study aggregate
Also known as “sunk cost” or “overhead cost” economic behavior such as output,
a. total cost b. total fixed cost employment, money and the general price
c. marginal cost d. average cost level
a. positive economics b.
25. For exchange potential to exist, one condition macroeconomics
must be satisfied c. microeconomics d. normative pricing
a. There are at least two parties
b. Each party is not free to accept or reject the 32. Willingness of the consumer to buy goods and
exchange offer services
c. Each party believes it is undesirable to deal a. supply b. demand
with the other party c. wants d. needs
d. Each party is incapable to deliver and
communicate 33. Willingness of the producer to produce more
or less goods and services in the market
26. Pure competition market was characterized by a. supply b. demand
the following except one
a. The product is homogenous c. wants d. needs
b. There is perfect mobility of resources
c. There are many buyers and sellers of a 34. The monetary authority of the Philippines
product a. Secretary of Finance
d. There is a limited control price
b. Bangko Sentral ng Pilipinas
27. This explains the relationships of variable c. Monetary Board
input and fixed input in the production process d. President of the Philippines
a. law of diminishing return
b. law of supply 35. Costs which business can be controlled in the
c. law of supply and demand short run by changing level of production
d. law of demand a. Total Fixed Cost b. Total Variable Cost
c. Total Cost d. Marginal Cost
28. A period when there is a rapid increase in the
overall price level
a. hyperinflation b. stagflation 36. Cost of self owned, self-employed resources
c. inflation d. sustained inflation a. Total Fixed Costs b. Total Variable
Costs
29. The ratio of unemployed work force to the c. Explicit Cost d. Implicit Cost
total labor force of a country
a. unemployment 37. The payment for the non-owners of the firm.
b. unemployment rate Also known as expenditure cost.
c. disguised unemployment a. Total Fixed Costs b. Total Variable
d. frictional unemployment Costs
c. Explicit Cost d. Implicit Cost
30. A curve showing the negative relationship of
inflation rate and unemployment rate 38. Increase in income would tend to decrease the
a. unemployment rate b. labor demand demand for a product. This product is
curve a. Normal goods b. Inferior goods
c. Philips curve d. business curve c. Capital goods d. Free goods

39. Goods which satisfy similar needs or desires

 a. Luxury goods b. Capital a. income effect
goods b. income elasticity of demand
c. Complementary goods d. c. demand
d. effective demand
Substitute goods
48. One whop buys commodities from the market
40. Goods which are use together to satisfy human a. Consumer c. Mother
wants b. Customer d. Decision-
a. Luxury goods b. Capital maker
goods
c. Complementary goods d. Substitute 49. Price will tend to rise in response to
a. a sharp decrease in population with no
goods
change in supply
b. a cost reducing technology, demand
41. A curve showing the relationship of unchanged
unemployment and inflation rate c. an increase in income with no change in
a. indifference curve supply
b. production possibility frontier d. none of the above
c. Phillips curve
50. The price at which the quantity per unit of
d. aggregate demand curve time that buyers want is just equal to the
quantity that sellers want to sell
42. The meaning of the word “economics” is most a. equilibrium price c. selling price
closely associated with the word b. buying price d. None of the
a. free b. unlimited
above.
c. scare d. restricted

43. The word economics means household

?
a. decisions b. keeping
c. management d. resources

44. The value of the best alternative one gives up

when a choice is made is called
a. implicit cost b. opportunity
cost
c. explicit cost d. cash cost

45. Unemployment caused by the business cycle is

known as
a. cyclical unemployment
b. structural unemployment
c. frictional unemployment
d. none of the above

46. Manipulation of the public budget government

spending and tax collections to achieve full
employment is called
a. monetary policy b. fiscal policy
c. public policy d.
economic policy

47. Desire for a product together with the capacity

to buy that product