Agma

Agricultural Economics & Marketing
REVIEWER Agriculturist Licensure Examination 2012 1
PRACTICE TEST IN AGRICULTURAL ECONOMICS & MARKETING
DIRECTION:Encircle the letterof the bestanswerfromthe choicesgiven.
1. The analysisof howan individual consumerorproducerrespondstochangesineconomic
environmentis
A. Macroeconomics C. Economictheory
B. Microeconomics D. Economicpolicy
2. The analysesof aggregate economicmagnitudeslikeinflation,moneysupply,interest,balance
of payment,amongothers.
A. Macroeconomics C. EconomicTheory
B. Microeconomics D. EconomicPolicy
3. An economicresource thatisconsideredasa“free giftof nature”
A. Land D. Entrepreneurial ability
B. Capital E. BothA and B
C. Labor F. Both C and D
4. It describeshowthe capitalisticeconomyworksgiventhe interactionbetweenthe households,
whoare the ownersof resourcesandthe firms,whoare the usersof resources.
A. CircularFlowModel C. TransformationCurve
B. ProductionPossibilityFrontier D. None of the above
5. Theyare the resource userswhoreceive receiptsorrevenuesaspayment forthe production
and salesof goodsand services.
A. Household C. Government
B. Businessfirm D. Rest of the world
6. It isan economicsysteminwhichall majordecisionsconcerningthe level of resource use,the
compositionanddistributionof output andthe organizationof productionare determinedby
the price system.
A. Socialism C. Capitalism
B. Communism D. Fascism
7. It isan economicsystemcharacterizedbypublicownershipof propertyresourcesandcollective
determinationof economicdecisionsthroughcentral economicplanning.
A. Socialism C. Capitalism
B. Communism D. Fascism
8. Economicdecisionsare guidedbywhichof the followingcriteria?
A. Marginal Costs are greaterthan Marginal Benefits
B. Marginal Costs are lesserthanMarginal Benefits

C. NeitherA norB
D. EitherA nor B
9. It formalizesthe relationshipbetweenprice andquantityconsumersare willingtobuyat those
prices.
A. Law of demand C. Demand
B. Law of supply D. Supply
10. Movementsalongagivendemandcurve are causedby changesin
A. Income D. Relatedgoods
B. Price E. All of the above
C. Taste and preferences
11. A downwardshiftinthe demandcurve will bringabout
A. an increase in equilibrium quantity and an increase in equilibrium price
B. an increase in equilibrium price and decrease in equilibrium quantity
C. an increase in equilibrium quantity and a decrease in equilibrium price
D. a decrease in equilibrium price and decrease in equilibrium quantity
12. Expectationof higherfuture foodprices maypromptconsumerstobuy
A. more foodin the future C. more foodtoday
B. lesserfoodtoday D. none of the above
13. A marketingservice thatinfluencesthe buyersand/orconsumerstobuy.The objective isto
informconsumerswhatisavailable forpurchase,especiallyif the productisnew inthe market
A. marketintelligence C. advertising
B. marketresearch D. branching
14. It issaid toexistwhenthe prevailingprice of acommodityisabove the equilibriumprice.
A. Shortage C. Producersurplus
B. Surplus D. Consumersurplus
15. Customarily,whengraphing,price isonthe Y-axisandquantityisonthe X-axis. If itis
interchanged,the demandcurve will be
A. slopingdownwardstothe right C. slopingupwardstothe right
B. slopingdownwardstothe left D. slopingupwards
16. Whichof the followingstatementsisincorrect?
A. Microeconomicsisprimarilyconcerned with the economic activities of the household,
business firms and the government sector
B. Microeconomics is primarily concerned with the flow of goods and services from
businessfirmstoconsumers,the compositionof the flow, and the evaluation or pricing
of the component parts of the flow.

C. Microeconomicsisprimarilyconcernedwiththe problemof what,how andfor whom to
produce
D. Microeconomicsis primarilyconcernedwiththe economicbehaviorof decisionmaking
unitswhenat equilibrium
17. A change indemandor supply.
A. is caused by a change in price
B. is represented by a movement from one point to another on the demand or supply
curve
C. iscausedby a change in any of the determinants of demand or supply other than price
and is represented by a shift of the entire demand or supply curve
D. none of the above
18. A change inquantitydemandedorsupplied
A. is caused by any of the determinants of demand or supply
B. is caused by a change in price of the good itself, when all other things remain
unchanged and is represented by a movement from one point to another on the
demand or supply curve
C. is represented by a shift of the entire demand or supply curve
19. The market equilibriumpointforacommodityisdeterminedby:
A. the marketdemand C. the balancingforcesof demandandsupply
B. the marketsupply D. any of the above
20. Commoditieswhose demandvariesdirectlywithmoneyincomerefersto
A. substitute goods C. normal goods
B. complementarygoods D. inferiorgoods
21. The relationshipthatexistsbetweenprice andquantitydemandedof independentgoods
A. inverse C. eitherA or B
B. direct D. NeitherA norB
22. The relationshipthatexists betweenprice andquantitydemandedof substitute goods
B. direct D. NeitherA norB
23. Relationshipbetweenachange insupplyof and equilibriumprice is
B. direct D. none
24. If there is an increase inthe price of sugar,there will be
A. A movementalongagivendemandcurve forsugardownwards

B. A movementalongagivendemandcurve forsugarupwards
C. A shiftof the demandcurve for sugarto the right
D. A shiftof the demandcurve for sugarto the left
25. If the numberof cellularphone usersincreases,there will be
A. A movementalongagivendemandcurve forcellularphonedownwards
B. A movementalongagivendemandcurve forcellularphoneupwards
C. A shiftof the demandcurve for cell phone tothe right
D. A shiftof the demandcurve for cell phone tothe left
26. If demandand supplybothincrease,equilibriumquantitywill
A. Increase C. Remainunchanged
B. Decrease
27. Whichof the followingmustbe satisfiedindrawingthe productionpossibilitiescurve?
A. fixedinputsandfixedtechnology C. fixedoutputsandfixedtechnology
B. fixedoutputsandfixedinputs D. None of the above
28. Whichof the followingwill shiftthe productionpossibilitiesoutward?
A. Newplantsandequipmentare built C. Economicgrowth
B. Populationgrowth D. Change in productiontechnique
E. All of the above
29. If the price of Good X isnegativelyrelatedwiththe demandforGoodY, then,
A. GoodsX and Y are substitutes C. Goods X andY are independent
B. GoodsX and Y are complements D. none of the above
30. A decrease inthe supplyof GoodA can be systematicallycausedby
A. An increase in the prices of other commodities
B. An increase in the price of inputs important to the production of this good
C. A decrease in the price of inputs important to the production of this good
D. Expectationof lowerfuture prices
31. The supplyof a productissaid to increase when
A. the supplycurve shiftsupward C. the supplycurve shiftsdownward
B. the supplycurve shiftsleftward D. the price of the goodincreases
For the next four (4) items, consider the following demand and supply equations for buko pie
Qd = 750 – 15P Qs= -150 + 30P
where Qd = quantity demanded of buko pie
Qs = quantity supplied of buko pie
P = price of bukopie
32. The equilibriumprice of bukopie is

A. 15
B. 5
C. 20
D. 90
E. Cannotbe determinedwithoutadditionalinformation
33. The equilibriumquantityof bukopie is:
A. 45
B. 450
C. 4.5
D. cannot be determined withoutadditional information
34. Surplusof bukopieswill occurif:
A. Its price will be higher than the equilibrium price
B. Its price will be lower than the equilibrium price
C. There will be additional buko pie outlets
D. There will be less buko pie outlets
E. cannot be determinedwithoutadditional information
35. Shortage of bukopieswill occurif:
A. Its price will be higher than the equilibrium price
B. Its price will be lower than the equilibrium price
C. There will be additional buko pie outlets
D. There will be less buko pie outlets
E. cannot be determinedwithoutadditional information
36. Whichof the followingstatementsiscorrect?
A. If supplycurve shiftstothe right while demandcurve shiftstothe left,equilibrium price
will rise
B. If supplycurve shiftstothe right while demandcurve shiftstothe left,equilibrium price
will fall
C. If supplycurve shiftstothe leftwhile demandcurve shiftstothe right,equilibrium price
will fall
D. If demandcurve shiftsto the rightwhile supplycurve isunchanged,equilibriumprice
will fall
Refer to the following hypothetical table for the next three (3) items
QD Price QS
80 4.80 73
75 5.00 75
70 5.20 77
65 5.40 79
60 5.60 81
37. If the price increasesfromP4.80 to P 5.20, the price elasticityof the productwill be

A. -1.67 and the product has inelastic demand
B. -1.67 and the product has elastic demand
C. -0.6 and the product is elastic
D. -0.6 and the product isinelastic
38. The Total Revenue canbe determinedbymultiplying
A. QD and price C. QD and QS
B. QS and price D. Cannotbe determined
39. The Total Revenue atmarketequilibriumis
A. 375 D. 351
B. 384 e.None of the above
C. 364
40. If an outletorstore sells250 bottlesof BenchBodySprayper monthwhenthe price isP100 and
sells200 bottleswhenthe price isP125, the price elasticityof demandis
A. -1.0 and demandisinelastic C. >1 and demandiselastic
B. -1.0 and demandisunitaryelastic D. <1 and the demandisinelastic
Use the followingsituationinansweringthe nexttwo(2) itemsbelow:
Consider the hypothetical price and quantity demanded for pandesal (in pc) for 2 months of a
household as follows:
Price/pc Qd. Income
Dec 2006 2.00 100 5,000
Jan 2007 2.00 120 4,000
41. The table showsthat
A. As income decreases from December to January, more pandesal were purchased
B. As income increases from December to January, more pandesal were purchased
C. More pandesal were purchased in January because the Christmas season is over
D. Income of the householdispositivelyrelatedwiththeirdemandforpandesal
42. Withthe available information,the incomeelasticityof pandesal will be
A. positive and greater than one to prove that pandesal is a luxury good
B. positive but less than one to prove that pandesal is a necessity
C. Negative toprove thatpandesal isaninferiorgood
43. If the cross elasticityof demandbetweenpeanutbutterandcheese spreadis 1.80,we can say
that
A. Peanut butter and cheese spread have elastic demand
B. Peanut butter and cheese spread are both normal goods
C. Peanut butter and cheese spread are substitute goods
D. Peanutbutterandcheese spreadare complementarygoods

44. Normative economicstatementisconcernedwithwhatshouldbe andisoftenidentifiedwith
policyprescriptions. Whichof the followingisanexample of normative economicstatement?
A. The governmentshouldincrease the tax forSMS (shortmessage service)
to increase governmentrevenues.
B. TaxingSMS will increase governmentrevenues.
C. The importationof rice shouldbe allowedduringperiodsof shortage toavoidthe price
of rice to increase abruptly.
D. If the government will not import rice during periods of shortage, price of rice will
increase
E. all of the above
45. An increase insupplywill leave the price unchanged unless
A. Supplyisperfectlyelastic C. Demandishighlyinelastic
B. Demandisperfectlyelastic
46. A vertical supplycurve canbe associatedwith
A. Perfectlyelasticsupply D. Long run supplycurve
B. Perfectlyinelasticsupply e.none of the above
C. Short run supplycurve
47. If the MU of the lastunitof X consumedistwice the MU of the lastunit of Y consumed,the
consumerisinequilibriumonlyif
A. the price of X is equal to the price of Y
B. the price of X is twice the price of Y
C. the price of X is one half of the price of Y
D. any of the above is possible
48. Whichof the followingstatementsisNOTtrue?
A. the TU curve is at its peak or saturation point when MU curve crosses the x-axis
B. the MU curve is negatively-sloped due to the law of diminishing marginal utility
C. the TU curve is U-shaped because as consumption increases, total utility declines
initially and then increases
D. the TU and MU curvesusedordinal utilitytomeasure satisfactionlevel
49. Usingthe indifference curve analysis,consumerequilibriumisachieved if:
A. MRSxy= Px/Py
B. An indifference curve is tangent to a given budget line
C. MUx/Px = MUy/Py
D. All of the above
E. None of the above
50. The statement1 balot= 3 piecesof siomai =50 utilsimplies
A. An ordinal measure of utility only
B. A cardinal measure of utility only

C. An ordinal and cardinal measures of utility
D. None of the above
51. Whichof the followingstatementsisNOTtrue basedonthe figure givenbelow?
A. IsoquantIIIdepictsthe highestlevel of output possiblebecause more unitsof capital
and laborare usedcomparedtoisoquantsI& II
B. The producer’sequilibriumconditionisatpointB where the isocostistangentto
IsoquantII
C. IsoquantIIIcannot be attainedbecause the available capital outlayisinsufficient
D. At pointB,MRTSLK > PL/PK
52. Ends whenTPcurve reachesits peakandMP curve crossesthe X-axis
A. Stage I of production C. Stage IIIof productionor
B. Stage II of production D. any of the above
53. Whichof the followingstatementsisNOTtrue inthe long-run?
A. the most efficient plant size is determined when a given short-run
B. average cost (SAC) curve is tangent to the lowest portion of the long run average cost
(LAC) curve.
C. diseconomiesof scale existswhenLACdeclines as the quantity of output increases due
to division of labor and specialization
D. the economies and diseconomies of scale in the long run is analogous to the law of
diminishing marginal returns in the short run
E. all costs are variable
54. An Animal Science graduate runningtheir family-ownedpiggerytakesoutP150,000 per year as
his“salary” fromthe total receiptsof theirfarm.The implicitcostof thisentrepreneuris
A. P 150,000 per year C. Lessthan P 150,000 per year
B. More than P150,000 peryear D. Anyof the above is possible
55. Whenthe law of diminishingmarginal returnsbeginstooperate,the TVCcurve beginsto
A. fall at an increasingrateC. fall at a decreasingrate
B. rise at a decreasingrateD. rise at an increasingrate
III
II
I
A
B
C
K
0
L

56. Whichof the followingindustries mostcloselyapproximates the perfectly competitive model?
A. oil C. postal service
B. movie D. rice farming
57. The short –run supplycurve of the perfectlycompetitivefirmisgivenby
A. the rising portion of its MC curve over and above the break-even point
B. the rising portion of its MC curve over and above the AVC curve
C. the rising portion of its MC curve over and above the AC curve
D. the risingportionof itsMC curve
58. Whichform of monopolyregulationismostadvantageousforthe consumer?
A. price control C. specifictax
B. lumpsumtax D. all of the above are equallyadvantageous
59. If price exceeds AVC but is smaller than AC at the best level of output, the firm is
A. making a profit
B. incurring a loss but should continue to produce in the short run
C. incurring a loss and should stop producing
D. breakingeven
60. If the monopolistimposesaperunittax, thiswill resultinwhichof the followingsituations?
A. AC curve alone to shift up
B. AC and MC curves to shift up because the per unit tax is like a fixed cost
C. AC and MC curves to shift up because the per unit tax is like a variable cost
61. Basedon the figure below,whichof the followingstatementsisNOTTRUE?
10 20 30 40 Q
A. the figure depicts that MR is lower than price. Hence, MR curve liesbelow the demand
curve
B. the firm is not operating under a purely competitive market
C. the firm is incurring losses at the given output level and price
MR
MC
C
AC
P
D

D. the firmmust produce 20 units of output
62. Whichamong the followingstatementsisincorrect?
A. wage rate is determined by the interplay of supply of and demand for labor
B. demandfor resources is a derived demand, meaning it is a function of the demand for
goods and services
C. interest is the payment for the use of natural resources like land
D. profitisthe incentive thataccruesto the management/entrepreneurialtalentsandskills
of the businessowner
Use the followingtable toanswerthe nextfive (5) items:
Output Total Revenue Total Cost Profit
0 0 400 -400
100 400 1000 -600
200 800 1300 -500
300 1200 1500 -300
400 1600 1600 0
500 2000 1700 300
600 2400 1850 550
700 2800 2100 700
750 3000 2265 735
800 3200 2500 700
900 3600 3600 0
63. The Total FixedCostis
A. zero C. 100
B. 400 D. 3600
64. In orderto attainmaximumprofit,the firmshouldproduce how manyunits?
A. 700 C. 800
B. 750 D. 900
65. The firmbreaksevenat
A. 400 D. 700
B. 900 e.400 & 900 unitsof output
C. Zero
66. The marginal revenue isequal to price at
A. 1 C. 3
B. 2 D. 4
67. Marginal cost at the outputlevel 400 isequal to:
A. 1 C. 3
B. 2 D. 4

68. Identifythe conditiondepictedbythe followingdataassumingaperfectlycompetitive market
model: Price = Php25/unit; TR = Php2500; TVC = Php 2500 and TFC = Php 500
A. profitmaximization C. breakeven
B. lossminimization D. shutdowncase
69. Whichamong the followingisanexample of animplicitcost?
A. salaries paid to hired farm workers
B. costs of seeds and fertilizers
C. depreciation cost of self-owned jeep used as delivery vehicle in the farm
D. landrent
70. MC can be derivedthrough
A. the slope of the TFC curve alone
B. the slope of the TVC curve alone
C. the slope of the TC curve alone
D. either the slope of the TVC curve or the slope of the TC curve
E. eitherthe slope of the TFCcurve or the slope of the TC curve
A. all cost curves are U-shaped except the AFC curve
B. the MC curve reaches its minimum point before the AVC curve and the AC curve
C. whenthe lawof diminishingreturnsbeginstooperate,the TVC curve begins to rise at a
decreasing rate
D. the MC curve intersectsthe AVCcurve andthe AC curve at theirlowest points
72. Assumingthatwe have increasingreturnstoscale. If we increase the quantityof capital used
perunitof time by20% but keepthe amountof laborconstant,outputwill
A. increase by20% C. increase bymore than20%
B. decrease by20% D. increase bylessthan20%
A. the LAC curve is tangent to the lowest point on the SAC curves when the LAC curve is
falling
B. If the LAC curve falls as output expands, this fall is due to economies of scale
C. LAC curve is an envelope curve of all possible SAC curves
D. The most efficientplantsize isderivedif the lowestportionof anSACistangentto the
lowestportionof the LAC
74. Whichamong the followingisNOTa source of monopolypower?
A. ownership of a patent
B. control over supply of a raw material
C. free entry to the industry
D. productbeingproducedhasno close substitute

MR2 = D2 = P2
MR1 = D1 =P1
MC
AC
AVC
75. A purelycompetitivefirmischaracterizedbyall exceptone of the following:
A. products are identical or homogenous
B. entry to the industry is blocked
C. there is perfect knowledge of prices
D. firmsoperatinginthe industryare price takers
76. Profitismaximumif :
A. the difference between TR and TC is maximum
B. marginal cost is equal to price
C. the slope of the TR curve is equal to the slope of the TC curve
D. all of the above
77. If the marketprice of a kiloof rice isPhp 24 while AVCandACare Php20/kg and Php25/kg,
respectively,the firmis
A. making a profit
B. incurring a loss but should continue to produce in the short run
C. incurring a loss and should stop producing immediately
D. breakingeven
78. The AFC inthe above givensituationis.
A. 3.0 C. 5.0
B. 4.0
79. Use the figure belowtoanswerthe nextthree (3) items:
P
Q
80. The above figure depictsthe situationfora
A. Monopolist C. Purelycompetitivefirm
B. Oligopolist D. Anyof the above
81. If the existingprice isP2 the firmis
A. Making a profit
B. Incurring a loss but should continue to produce in the short run
C. Incurring a loss and should stop producing immediately
D. Breakingeven
82. If the marketprice becomesP1 the firmis

A. Making a profit
B. Incurring a loss but should continue to produce in the short run
C. Incurring a loss and should stop producing immediately
D. Breakingeven
83. Which of the following statements is incorrect given the total cost function:
TC = 250 + 20Q + 10Q2
A. AFCis 25 at Q = 10 C. AVCis 130 at Q = 10
B. TC is 400 at Q = 3 D. ATC is 145 at Q = 10
84. An example of afixedcostis:
A. Salaries of farm laborers
B. Interest payments on loans used to purchase farm machineries
C. Cost of feeds and biologics
D. Gasoline usedtorunthe waterpumpfor irrigation
85. Specializationanddivisionof laborwilllikelytoresultin:
A. Economiesof scale C. Law of diminishingmarginal returns
B. Diseconomiesof scale D. Anyof the above
86. The boundarybetweenState IandStage II of productiongivenone variable inputiswhen
A. Marginal Product is equal to zero
B. Average Product is declining and Marginal Product is greater than Average Product
C. Marginal Product = Average Product
D. Total Productismaximum
87. A technological improvementoccursinthe productionof gasoline.Whateffectwouldthishave
on the equilibriumprice andequilibriumquantityof gasoline?
A. Equilibriumprice andquantitywouldbothincrease
B. Equilibriumprice wouldincrease,butequilibriumquantitywoulddecrease
C. Equilibriumprice woulddecrease,butequilibriumquantitywouldincrease
D. Equilibriumquantitywouldincrease,butthe effectonprice isindeterminate
88. The equilibriumquantityforgoodXis20 unitsperday and the equilibriumprice isP100per
unit.If a surpluscurrentlyexistsforgoodX,then
A. the price currentlyislessthanP100 per unit,quantitysuppliedisgreaterthan20 units
perday, and quantitydemandedislessthan20unitsper day
B. the price currentlyislessthanP100 per unit,quantitysuppliedislessthan20 unitsper
day,and quantitydemandedislessthan20 unitsperday
C. the price currentlyislessthanP100 per unit,quantitysuppliedislessthan20 unitsper
day,and quantitydemandedisgreaterthan20 unitsperday
D. the price currentlyisgreaterthan P100 perunit,quantitysuppliedisgreaterthan20
unitsperday, and quantitydemandedislessthan20 unitsperday

89. Overtime itis observedthatthe equilibriumprice of goodXhas increased,althoughthe
equilibriumquantityhasremainedconstant.Itcan be concludedthat
A. the entire supplycurve hasshiftedtothe rightwhile the entiredemandcurve has
shiftedtothe left
B. there have beenshiftsinboththe entire supplyanddemandcurvestothe right
C. there have beenshiftsinboththe entire supplyanddemandcurvestothe left
D. the entire supplycurve hasshiftedtothe leftwhilethe entiredemandcurve hasshifted
to the right
90. Assume thatthe equilibriumwage forunskilledworkersisexactlyP150per day,the level of the
minimumwage.If arecessionoccurredandthe demandforlabor decreased,the
A. a shortage of laborwouldoccur
B. a surplusof unemployedlaborwould result
C. the entire supplycurve for laborwouldshifttothe right
D. the entire supplycurve forlaborwouldshifttothe left
91. Good X currentlyisat itsequilibriumprice of P20per unitandits equilibriumquantityof 35
unitsperday. The entire supply curve thenshiftsupandtothe leftbecause of achange in
supply.If a price ceilingof P20 perunitisimposedbythe government,then
A. quantitydemandedwill remainat35 unitsperday anda surpluswill result
B. quantitydemandedwill remainat35 units perday anda shortage will result
C. quantitydemandedwill decrease below 35unitsperday and a surpluswill result
D. quantitydemandedwill decrease below 35unitsperday and a shortage will result
92. A governmentimposedprice ceiling(maximumlegal price) onrentsinapartmentinMetro
Manilawill create a
A. shortage if the price is setbelow the equilibriumprice
B. surplusif the price is set below the equilibriumprice
C. shortage if the price is setabove the equilibriumprice
D. surplusif the price isset above the equilibriumprice
93. Good X isa necessityandthere are no close substitutesavailable forit.If the price of goodX
were increasedby25%,thenthe producersof goodX can expectthat
A. quantitydemandedwoulddecreasebymore than25% because demandiselastic
B. quantitydemandedwoulddecreasebymore than 25% because demandisinelastic
C. quantitydemandedwoulddecreasebylessthan25% because demandiselastic
D. quantitydemandedwoulddecreasebylessthan25% because demandisinelastic
94. If a firmincreasesthe price of itsproductby 8% and discoversthatitstotal revenue (TR)
increasesasa result,thenitcan conclude that
A. quantitydemandeddecreasedbylessthan8% andthus demandiselastic
B. quantitydemandeddecreasedbymore than8% and thusdemandiselastic
C. quantitydemandedincreasedbylessthan 8% andthus demandisinelastic
D. quantitydemandeddecreasedbylessthan8% andthus demandisinelastic

95. Recentstudieshave confirmedthatthe demandforelectricityisinelastiC.Asthe price of
electricityincreases,
A. total pesospentbyconsumerson electricitywillincrease because the percentage
increase inquantitydemandedwillbe greaterthanthe percentage increaseinprice
B. total pesospentbyconsumerson electricitywillincrease because the percentage
increase inquantitydemandedwillbe lessthanthe percentage increase inprice
C. total pesospentbyconsumerson electricitywilldecreasebecause the percentage
decrease inquantitydemandedwill be greaterthanthe percentage increaseinprice
D. total pesospentbyconsumerson electricitywillincrease because the percentage
decrease inquantitydemandedwill be lessthanthe percentage increase inprice
96. Whichof the followingcharacteristicswill tendtomake the demandforgoodX mostinelastic?
A. Good X representsasmall share of mostconsumers’budgetsandthere are manyclose
substitutesavailableforit
B. Good X representsasmall share of mostconsumers’budgetsandthere are noclose
C. Good X representsalarge share of most consumers’budgetsandthere are manyclose
D. Good X representsalarge share of most consumers’budgetsandthere are noclose
Use the followingdiagramforthe nextfour(4) items
97. The resource marketis where
A. household sell products and businesses buy products
B. businesses sell the resources and household buy products
C. household sell resources and businesses buy resources
D. businessessellresourcesand householdbuyresources
98. Whichof the followingwill be determinedinthe productmarket?
A. manager’s salary
B. the price of equipment used in a manufacturing firm
C. the price of a 30-hectare farmland
D. the price of a newpairof leathershoes
RESOURCE
MARKET
BUSINESS
FIRMS
PRODUCT
MARKET
HOUSEHOLD
Costs
Receipts
Rents, interests,
Salaries, profit
Costs
Economic resources
Goods and services
Land, capital, labor
Entrepreneurial ability
Consumption
expenditures

99. In thiscircularflowdiagram
A. money flows counterclockwise
B. resources flow counterclockwise
C. goods and services flow clockwise
D. householdsare onthe supplyside of the productmarket
100. In the same diagram,
A. household spend income in the product market
B. firms supply resources to the household
C. household receive income through the product market
D. householdproduce goods
101. A firmwhichisproducing100 unitsof quantitydiscoversthatat thisquantityall of the
followingvariableshave positivePvalues.Whichone hasthe highestPvalue atthisquantity?
A. Total Revenue (TR) C. Total Profit(TP)
B. Total Cost(TC) D. Total FixedCost(TFC)
102. A firmissellingitsproductatP10 per unit.Itdoublesthe price of itsproductto P20 per unit
and discoversthatitsquantitydemandedis cutexactlyinhalf asa result.The firmcan
conclude thatbetweenP10and P20,
A. total revenue (TR) will increase becausedemandisinelastic.
B. total revenue (TR) will decrease becausedemandiselastic.
C. total revenue (TR) will remainconstantbecause demandisinelastic.
D. total revenue (TR) will remain constant because demand is of unitary elasticity
(elasticityvalue =1).
103. The statementthatsardinesisan inferiorgood,aseconomistsuse the term,
A. meansthat as the price of sardinesfalls,the quantitydemandedof sardinesfalls
B. meansthat there isno real income effectwhenthe price of sardineschanges
C. isan example of anormative statement
D. meansthat as the average level of income falls,the demandforsardinesrises
E. meansthat the supplyof sardinesisperfectlyinelastic
104. The difference betweenascarce (economic) goodanda free goodisthat
A. for free goodsat a price of zero enoughof the goodis available tocompletelysatisfy
consumers'demandforthe good
B. free goodsnolongerexist -- there are onlyscarce goods
C. free goodsare made withnatural resources
D. free goodsare providedbythe government
105. Suppose thatas the price of gasoline risesfromP33.00 perlitertoP50 per liter,the quantity
of gasoline soldincreasesfrom10millionlitersto15 millionliters.Whichof the followingisa
possible explanationforthis?
A. There were fewerusersof automobiles

B. The price of publictransportationincreasedoverthe same time period
C. The demandcurve for gasoline isperfectlyinelastic
D. All of the above are possible explanations
106. If the demandforproductJ shiftsto the leftasthe price of productK increases,then
A. J and K are complementarygoods
B. J and K are not relatedgoods
C. the numberof consumersof product K hasincreased
D. J and K are substitute goods
107. A seriesof servicesinvolvedinmovingaproductfrom the pointof first sale (usuallyatthe
farm level)tothe pointof lastsale (tothe consumer) refersto
A. Marketingoperation C. Marketing
B. Marketingfunction D. Buyingandselling
108. In agricultural marketing,the utilitycreatedif goodspossessthe requiredpropertiesthat
consumerswantthemto be
A. Form utility C. Place utility
B. Time utility D. Possessionutility
109. The strawberriesof Benguetcanbe boughtinthe supermarketsof Manila.Whatutilitywas
createdinthissituation?
A. formutility C. place utility
B. time utility D. possessionutility
110. Thisrefersto an activityorfunctionperformedtoalterthe form,time,place orpossession
characteristicsof the product
A. marketingservice C. marketplanning
B. foodprocessing D. marketingfunction
111. A marketingservice thatinfluencesthe consumerstobuy.The objective istoinform
consumerswhatisavailable forpurchase,especiallyif the productisnew inthe market.
A. marketintelligence C. marketresearch
B. advertising D. branding
112. An approachinthe studyof marketingwhichcoversthe characteristicsof the product,the
marketdemandandsupplysituationatthe domesticandinternational level,the behaviorof
the consumersinrelationtoa specificproduct,andpriceseitheratthe farm, wholesale or
retail level
A. institutional approach
B. commodityapproach
C. functional approach
D. market-structure-conduct-performance approach

113. Thisagentusuallydoesnothave physical control of the product.He ordinarilyfollowsthe
instructionsof hisprincipal closelyandhaslessdiscretionarypowerinprice negotiationsthan
the commissionagent
A. Agentmiddlemen C. Commissionagent
B. Merchant middlemen D. Broker
114. Thismarketingfunctioninvolvesthe establishmentandmaintenanceof uniform
measurement.Thisfunctionalsosimplifiesbuyingandselling,since itmakespossible the sale
by sample anddescription
A. Financingfunction C. Standardizationfunction
B. Risk-bearingfunction D. Market intelligence function
115. A type of marketwhere the numberof buyersandsellersissufficientlylarge sothatno
individualcanperceptiblyinfluence price byhisdecisiontobuyorsell.The productis also
sufficientlyhomogenoussothatthe productof one firmisessentiallyaperfectsubstitute for
that of other firms.
A. Monopolisticmarket C. Oligopolisticmarket
B. Purelycompetitive market D. Perfectmarket
116. Thismarketingfunctionaddressesthe problemof productseasonality.The primaryaimof
whichisto helpbalance the periodof plentytothe periodof scarcity
A. Pooling C. Processing
B. Storage D. Packaging
117. It referstoan inter-organizationalsystemmade upof aset of interdependentinstitutionsand
agenciesinvolvedinthe taskof movingproductsfromtheirpointof productiontothe pointof
consumption.
A. Marketingsystem C. Marketingchannel
B. Marketingmargin D. Marketingprogram
118. These are product handlerswhoserve asthe lastlinkinthe marketingchannel.Theyhave
greaterutilitybothinrural and urban centersby sellingdirectlytoconsumers.Theyoccupy
permanentstallsinthe marketoron roadsides.Sellingisona retail basisandis conducted
almosteveryday
A. Merchant middlemen C. Retailers
B. Wholesalers D. Brokers
119. Thisrefersto the difference betweenpricesatdifferentlevelsof the system.Itcanalsobe
definedasthe difference betweenwhatthe consumerpaysandwhatthe producerreceives
for hisagricultural produce.Itisalsotermedas“price spread”betweenfarmprice andretail
price.
A. Marketingcosts C. Marketingmargin
B. Marketingcharges D. Mark-up

120. Thisrefersto the cost of marketingservicesrenderedbetweenthe farmersandconsumers.
These include laborwages,interestonborrowedcapital,landrent,buildingrental,andthe
profitof the entrepreneurwhoriskshiscapital
A. Marketingcosts C. Marketingmargin
B. Marketingcharges D. Mark-up
121. It isone type of middlemaninagriculturalmarketingwhose function,inmoderntimes,have
increasedfromchangingproductformsto buyingraw materialstowholesalingthe finished
productto retailers
A. Processorsandmanufacturers C. Wholesalers
B. Facilitative organization D. Assembler-wholesaler
122. Thisapproach coversconsumerpreferences,demandandsupplyanalysis,product
characteristicsandprice behavior
A. commodityapproach D. Industrial organizationsapproach
B. institutional approach e. marketefficiencyoranalytical approach
C. functional approach
123. Producersshoulderanyincrease intransportationcostinthe short run because of
A. inelasticsupplyinthe shortrun
B. elasticsupplyof agricultural productsinthe shortrun
C. consumers’resistance
124. In the CobwebModel,pricesandquantitiesare viewedaslinkedrecursivelyinacausal chain.
A highprice leadstolarge production,the large supplyresultsinlow prices,whichinturn
resultinsmallerproduction,andsoforth.Thismodel explainsthe:
A. seasonal price variation C. cyclical price variation
B. annual price variation D. irregularmovements inprices
125. Demandforfinishedproduct,e.g.,choice cutsof meatisconsidered
A. Primarydemand C. Consumerdemand
B. Driveddemand D. Both a and c
126. A brand name isa symbol tomake the product
A. easyto recognize C. Competitive
B. to conveya meaning D. A and B
127. It isa marketingactivitywhichinvolvesthe sortingof productsintolotsorunitsaccordingto
one or more of theirqualityattributes
A. Standardization C. Grading
B. Packaging D. Branding

128. It isa part or componentof the marketing system, whichincludesthe climatic/physical,socio-
cultural,economic,technological,andlegal/political factors,thataffectsthe marketingsystem
A. consumersubsystem C. environmentsubsystem
B. functional subsystem D. channel subsystem
129. A marketingfunctionwhichdoesnotonlyencourageconsumerstobuy,butalsoto encourage
themto buymore thanwhat theyneeD.
A. advertising C. Packaging
B. promotion D. Selling
130. Theyare those individualsorbusinessconcernsthatspecialize in performingthe various
marketingfunctionsinvolvedinthe purchase andsale of goodsastheyare movedfrom
producersto consumers
A. Middlemen C. Processors
B. Farmers D. Consumers
131. Economiesof scale,capital requirement,governmentrulesand regulationsandinherent
technical relationshipsinthe industryare dimensionsof
A. productdifferentiation C. barrierto entry
B. sellerconcentration D. marketconduct
132. The componentsof the marketingmarginare
A. marketingcostsandmarketingcharges
B. marketingcostsandtransportationcosts
C. transportationcostsandprocessing costs
D. marketingcostsandstorage costs
133. A seriesof figuresrepresentingthe absolute marginsof differenttypesof middlemen
assignable todifferentmarketingfunctionsdividedbythe retail price.
A. percentage margin C. percentage mark-up
B. constantmargin D. breakdownof the consumerpeso
134. Thisis a pricingstrategyto gainmore customerswhile maintaining/holdingthe presentones.
(e.g.,odd-centavopricing,even-centavopricing,qualityimagepricing,price of P0.99etC.)
A. unitpricing C. special pricing
B. price lining D. psychological pricing
135. A majorspecializedactivityperformedinaccomplishingthe different marketingprocesses
A. marketingsystem C. marketingfunction
B. marketingmachinery D. marketinginstitutions

Please refertothe givenfigure foritems 136-142
136. The givenmarketingchannel has___ product flows
A. 11 C. 5
B. 9 D. 8
137. The simplestproductflowis
A. F-CB-R-C C. F-AW-WR-C
B. F-WR-R-C D. F-WR-C
138. The ultimate linktothe consumersin thissystemisthe
A. Retailer C. contract buyer
B. wholesaler-retailer D. botha and b
139. The proportionhandledbythe assembler-wholesaleris
A. 25% C. 55%
B. 30% D. 45%
140. The contract buyerhandles___of the volume soldbythe farmer
A. 100% C. 63%
B. 37% D. 17%
141. The proportionwhichreachedthe final consumerisequivalentto
A. 100% C. Nobasisbecause of the losses
B. 99%
142. The volume handledbythe farmersrepresentstheir
A. total production C. production+ consumption
B. production+ imports D. marketable surplus
1%
losses
18%
CB
R
63% 7%
30%
22%
CF
100% WR
R
AW
WW
15%
1% losses
Farmers
100%
AW/W

143. It isa type of middlemanwhotakestitletoandtherefore,ownsthe productshe handles.He
alsobuysand sellsforhisgain.
A. Middleman C. Commissionagent
B. Merchant middleman D. Broker
144. A type of middlemenwhoactonlyas representative of theirclient.Theydonottake title to
and therefore donotownthe productstheyhandle.Theyjustreceive theirincomesinthe
formof feesandcommissions.Theysell theirservicestotheirprincipal,notphysical goodsto
consumers
A. agentmiddlemen C. commissionagent
B. merchantmiddlemen D. Broker
Use the following situation in answering the next six (6) items.
An onionfarmerfromNuevaEcija soldhisproduce toan assembler- wholesaleratP7.50/kg
and latersoldthisto a wholesaleratP8.00 perkg. The wholesalerinturndisposedthistoa
retaileratP10.00/kg wholatersolditto consumersat P15.00/kg.
145. The price spreadfor the onionis
A. P2.50 perkg C. P5.00 perkg
B. P1.50 perkg D. P7.50 perkg
146. The farmer’sshare is
A. 50% C. 25%
B. 75% D. 67%
147. The absolute marketingmarginof the farmeris:
A. P 0.50 per kg C. P 2.00 per kg
B. P 7.50 per kg D. None/P0.00
148. The wholesaler’spercentagemark-upis
A. 0% C. 13%
B. 20% D. 25%
149. The retailers’percentage marginis:
A. 50% C. 33%
B. 67%
150. The retailer’spercentage markupis:
A. 50% C. 33%
B. 67%

151. Fredis able tohelpnegotiate the purchase process,whileunitingbuyersandsellers. They
greatlyvalue hisexpertise,andhe doesn’thave tobuythe productsinorder to resell them.
Fredis a ________.
A. commissionmerchant D. truck wholesaler
B. drop shipper e.Manufacturer’sAgent
C. broker
152. Real GDP (or GDP in"constant dollars") means
A. GDP has beenadjustedforprice levelchanges
B. GDP is notchanging
C. GDP has beencorrectedforqualitychanges
D. priceshave notchanged
E. GDP has beencorrectedforchangesintastes
153. Whichof the followingitemsisexcludedfromthe calculationof GDP?
A. the purchase of 100 sharesof General Motorsstock
B. the sale of 100 sharesof General Motorsstock
C. the value of a housewife'sservices
D. the sale of unusedmilitarysurplus
E. all of these
154. GNP represents:
A. The market value of all intermediate goods and services produced by the economy
within the year
B. The market value of all final goods and services produced by the economy within the
year
C. The market value of all final and intermediate goods and services produced by the
economy within the year
D. Anyof the above
155. The phase of the businesscycle whereinoutputisatitshighestandemploymentexpandsto
full employment.
A. Peak C. Trough
B. Recession D. Recovery
156. Whichamong the followinggroupsof people ismostnegativelyaffectedbyinflation?
A. businessmen
B. governmentemployeesreceivingfixedincomes
C. salesmen receiving commissions
157. Whichamong the followingtransactionsshouldbe includedinthe computationof GNP?
A. sale of a second-hand automobile
B. sale of marketable securities like bonds and stocks

C. sale of agricultural products like vegetables and cereals
158. It isthe slope of the consumptionfunctionwhichisthe change inthe level of consumption(C)
resultingfromachange in disposableincome (Yd)
A. average propensitytoconsume C. marginal propensitytosave
B. marginal propensitytoconsume D. average propensitytosave
159. If,from year1 to year2, real GDP decreasesdespite the factthatmoneyGDP increased,then
it can be concludedthatthe price level index
A. increased,butbya smallerpercentage thanmoneyGDPincreased
B. increasedbya greaterpercentage thanmoneyGDPincreaseD.
C. decreasedbya greaterpercentage thanmoneyGDPincreaseD.
D. decreased,butbya smallerpercentage thanmoneyGDP increaseD.
160. Whichone of the followingwouldcause the greatestamountof unemployment?
A. boththe aggregate demandandsupplycurvesshifttothe right.
B. boththe aggregate demandandsupplycurvesshifttothe left.
C. the aggregate demandcurve shiftstothe right andthe aggregate supplycurve shiftsto
the left.
D. the aggregate demandcurve shiftstothe leftandthe aggregate supplycurve shiftsto
the right.
161. The reserve heldbythe bankoverand above the legal reserve
A. requiredreserve C. interestrates
B. excessreserve D. none of the above
162. Keynesrecognizedthatthere are three distinctmotivesforholdingmoney. How wouldyou
classifymoneybalancesheldtomeetunforeseencontingenciesbecause of uncertaintyabout
the receiptandexpenditure of future income.
A. speculative demandformoney C. precautionarydemandformoney
B. b. transactiondemandformoney D. real demandformoney
163. A householdpurchaseddollarsthistimethatthe Philippine pesoisstronggivenanexchange
rate of Php41:$1, withthe anticipationtosell saiddollarswhenits value appreciates. What
demandformoneyisexhibitedbythissituation?
A. speculative demandformoney C. precautionarydemandformoney
B. transactiondemandformoney D. real demandformoney
164. Nominal moneysupplyis
A. the peso value of the nation’s money supply
B. flow of receipts per unit of time
C. checking accounts at commercial banks
D. pesovalue of the moneysupplyoverthe price level

165. It measuresthe change inthe equivalentlevel of incomedue toa change inthe aggregate
expenditures
A. marginal propensitytoconsume C. balance budgetmultiplier
B. multiplier D. marginal propensitytosave
166. Thisis a group of policieswherepublicbudget,governmentspendingandtax collectionsare
manipulatedtoachieve full employment
A. fiscal policy C. businesspolicy
B. monetarypolicy D. agricultural policy
167. The problemof unemploymentexistswhenpeople whoare willingandable toworkcouldnot
findjobs. What type of unemploymentiscausedbyadeficiencyof aggregate ortotal
demand?
A. Frictional unemployment C. Cyclical unemployment
B. Structural unemployment D. Underemployment
168. Crude oil isone of the primaryinputstoproductionforit runs factorymachinesand
equipment. Anincrease initsprice inthe worldmarketwill resulttowhattype of inflation?
A. Demandpull orExcessdemandinflationC.
B. Cost pushinflation
C. Demandshiftinflation
169. The equationC= 50 + 0.80 Yd predictsthat the consumptionis
A. 130 whenDisposableincome is100 C. 100 whenDisposable incomeis90
B. 120 whenDisposableincome is100 D. 180 whenDisposableincome is200
170. An increase inthe level of taxesleviedonhouseholdsnegativelyaffectsaggregate demand
througha reductioninthe disposable income. Hence,the value of the tax multiplieris
A. Greater than the government expenditure multiplier
B. Equal to the government expenditure multiplier
C. Less than the government expenditure multiplier
D. Equal to the investmentmultiplier
171. Keynes’fundamentallawstatesthat
A. the change in income is greater than the change in consumption
B. the change in consumption is greater than the change in income
C. people stop consuming when they become affluent
172. An autonomousincrease ininvestmentwill resultin
A. Higher level if income and higher rate if interest
B. Lower level of income and lower rate of interest

C. Higher level of income and lower rate of interest
D. Lowerlevel of income andhigherrate of interest
173. If the national governmentlowerstaxesandgovernmentspendingby10, and the MPC is 0.90,
the income will fall by
A. 90 C. 10
B. 80 D. 30
174. Equilibriumoccursinatwo-sectormodel when
A. Savings equals investment
B. Consumption plus investment equals planned investment
C. Aggregate spending equals the revenue of business firms
175. If the marginal propensity toconsume is0.80,the multiplierhasa value of
A. 2 C. 4
B. 3 D. 5
176. The Cambridge versionof the equationof exchangeis
A. MV = Y C. MY = k
B. Mk = Y D. M = kY
177. The Central Bank can increase demanddepositsby
A. Loweringreserve requirementor decreasingthe volumeof reserves
B. Increasingreserve requirementordecreasingthe volumeof reserves
C. Loweringreserve requirementorincreasingthe volumeof reserves
D. Increasingreserve requirementorincreasingthe volumeof reserves
178. If the demandformoneyequals0.25Y, the moneymultiplier(Mm) hasa value of
A. 0.25 C. 4.0
B. 2.50 D. 5.20
179. If moneywagesincrease andthere isnochange inthe price level,the real wage
A. increase andthe employmentof labordecreases
B. increase andthe employment of laborincreases
C. decreasesandthe employmentof labordecreases
D. decreasesandthe employmentof laborincreases
180. In a two-countrymodel of trade where importsinbothcountriesare afunctionof their
domesticlevelsof income,anincrease inA’s imports
A. causesB’s exportstodecrease C. has noeffectonB’s exports
B. causesB’s exportstoincrease D. causesB’s income leveltofall

181. Whichof the followingstatementsisincorrect?
A. There isa precautionarydemandformoneytomeetcontingencies orunforeseen
expenditures
B. The quantityof moneyheldforprecautionaryneedsfallsashouseholdsare paidmore
frequently
C. There isa precautionarydemandformoneybecauseof uncertaintyaboutthe receiptof
future income
D. The precautionarydemandformoneyisunrelatedtothe levelof income
182. Whichof the followingrelationshipbetweenMarginal PropensitytoConsume (MPC) and
Marginal PropensitytoSave (MPS) istrue?
A. MPC – MPS = 0 C. MPC + MPS =1
B. MPC – MPS = 1 D. None of the above
183. 182. Giventhe equationC= Php 50 + 0.80Yd, whichof the followingstatementsisincorrect?
A. ConsumptionisPhp130whendisposable income isPhp100
B. The value of consumptionwill increase byPhp0.80for everypesoincrease indisposable
income
C. The value of savings isPhp40 whendisposable income isPhp200
D. The value of the multiplieris2.0
184. If the marginal propensitytosave is0.25, the multiplierhasa value of
A. 5.0 C. 3.0
B. 4.0 D. 2.0
185. 184. If the increase ingovernmentspendingismatchedbyadecrease intransferpayments,
the income level will
A. stay the same C. Fall
B. Rise
186. If C = Php 75 + 0.90Yd,
A. the MPC is75 C. the MPS is 0.10
B. the MPC is0.10 D. the MPS is 0.90
For the nextfive (5) items,use the table givenbelow. Assume thatincome (Y) and
consumption(C) expendituresare inmillionsof pesos.
Y 0 100 200 300 400 500
C 50 130 210 290 370 450
187. The consumptionfunctionisgivenby:
A. C = 0 + 0.80 Y C. C = 130 + 0.80 Y
B. C = 50 + 0.80 Y D. Y = 50 + 0.80 C

188. The savingfunction(S) isgivenby:
A. S = -50 + 0.20 Y C. S = 0 + 0.20 Y
B. S = -50 + 0.80 Y D. Y = -50 + 0.20 C
189. The value of S at Y = 300 is
A. Php5 million C. Php15 million
B. Php10 million D. Php20 million
190. The value of the multiplieris
A. 2 C. 4
B. 3 D. 5
A. There isa dissavingsof Php50 millionwhenY= 0
B. There isa savingsamountingtoPhp50 millionwhenY= 400
C. MPS = 1 – 0.80
D. An increase ininvestmentbyPhp10 millionwill increase equilibriumincome byPhp50
million
Use the data givenbelowto answerthe nexttwo(2) items:
A thresherwaspurchasedinJanuary1, 2006 valuedat P75,000.00. It is estimatedtolastfor
five years afterwhich itwill have avalue of Php5,000.
192. The depreciationcost forone yearis:
A. Php7,500 C. Php14,000
B. Php15,000 D. Php10,000
193. The book value of the thresheratthe endof year2007 is
A. Php47,000 C. Php74,000
B. Php65,000 D. Php50,000
194. Whichamong the followingstatementsiscorrect?
A. As accumulateddepreciationincreasesthroughtime,the bookvalue of the thresher
alsoincreases
B. The book value of a fixedassetafteritsuseful lifeisitssalvage value
C. Land can alsobe depreciatedbecause itisafixedassetlike the thresher
D. All statementsabove are correct
195. Givena proportional tax structure anda governmentbudgetthatiscurrentlyinbalance,an
autonomousincrease ininvestmentwill increasethe level of equilibriumincomeandthe
budget
A. Will still be inbalance C. Will have a deficit

B. Will have a surplus D. None of the above
196. An economyisinequilibriumwhen
A. Plannedconsumptionexceedsplannedsaving
B. Plannedconsumptionexceedsplannedinvestment
C. Plannedspendingequalsthe value of output
D. Plannedspendingequalsthe revenue of the businesssector
197. A tax of P1.46 perpack of cigarette isan example of
A. ad valoremtax C. Income tax
B. Excise tax D. None of the above
198. Mr. Nestorloseshisjobin2002 because hisfamilyrelocatedtoZambales.Mr.Nestoris
considered
A. structurallyunemployedin2002 C. cyclicallyunemployedin2002
B. frictionallyunemployedin2002 D. a discouragedworkerin2002
199. 198. Whichone of the followingwouldcause the greatestamountof inflation?
A. boththe aggregate demandandsupplycurvesshifttothe right.
B. boththe aggregate demandandsupplycurvesshifttothe left.
C. the aggregate demandcurve shiftstothe right andthe aggregate supplycurve shiftsto
the left.
D. the aggregate demandcurve shiftstothe leftandthe aggregate supplycurve shiftsto
the right.
200. An increase inaggregate demandwill cause
A. an increase inboththe economy'sprice level andgrossdomesticproduct(GDP)
B. a decrease inboththe economy'sprice level andgrossdomesticproduct(GDP)
C. an increase inthe economy'sprice level,butadecrease ingrossdomesticproduct(GDP)
D. a decrease inthe economy'sprice level,butanincrease ingrossdomesticproduct(GDP)

201. The graphical changesfrom pointE to pointN notedabove wouldbe causedbywhichone of
the followingactions?
A. Social securitytaxesare raised
B. The federal governmentincreasesspendingbyrebuildingthe nation'shighways
C. The cost of energyincreasesasworldoil pricesrise
D. Technological improvementsincreaseworkerproductivity
202. Thistheoryviewedthe processof developmentasa seriesof successive stagesthroughwhich
all countriesmustpass
A. linearstagestheory C. internationaldependenttheory
B. neoclassical model D. structural change model
203. Statessimply thatthe rate of growthof GNP isdeterminedbythe national savingsratioand
the capital-outputratio
A. Lewismodel C. Rostow’smodel
B. Harrod-Domargrowthmodel D. Dualisticmodel
204. It isa conceptwhichrepresentsthe existence andpersistence increasingdivergence between
rich andpoor nationsandrich and poorpeople onvariouslevels
A. Dualism C. Neoclassical
B. Equity D. Say’slaw
205. The capacity of an economyto generate andsustainanannual increase initsGNPat ratesof
perhaps5 to 7% or more isknownas
A. Lewismode C. Harrod-Domargrowthmodel
B. Development D. Dualism
206. All exceptone of the followingare inthe areaof macroeconomics. Whichisthe exception
A. Why unemploymentrisesduringrecession
B. Effectsof inflation onpeopleandeconomicactivity
C. The cyclesof recessionandexpansionsince WorldWarII
D. Expansionof the applicationof computerstohealthcare diagnoses
E. None of the above
207. Mary lostherjobas a drill pressoperatorwhencomputerassisteddrillingequipmentwas
installedbyherformeremployer.Maryisnow seekingmedical training. Mary's
unemploymentisfrictional.
A. secular C. natural
B. tructural D. cyclical
208. The inflationrate canbe foundby
A. subtractingreal income fromnominal income.
B. subtractinglastyear'sprice index fromthisyear'sprice index.
C. calculatingthe percentchange inreal income.

D. subtractinglastyear'sprice index fromthisyear'sprice index anddividingthis
difference bylastyear'sprice index.
E. subtractingreal income fromnominal income anddividingthisdifference bynominal
income.
209. If a country'sstock of privatelyownedcapital isgreateratthe endof the yearthan itwas at
the beginningof the year,itmustbe the case that
A. depreciationwaslessthannet private domesticinvestment
B. netprivate domesticinvestmentexceededgrossprivate domesticinvestment
C. interestrateshave fallen
D. netprivate domesticinvestmentwaspositive
E. the change in businessinventorieswaspositive
210. Use the table at the right. The marginal propensitytoconsume is
A. .3 Income Saving
B. .4 $0 $-20
C. .5 100 10
D. .6 200 40
E. .7 300 70
211. The most expansionarymonetarypolicyconsistsof
A. buyingsecurities,loweringthe reserverequirement,andloweringthe discountrate.
B. sellingsecurities,loweringthe reserverequirement,andloweringthe discountrate.
C. buyingsecurities,loweringthe reserverequirement,andraisingthe discountrate.
D. loweringthe discountrate andloweringthe reserve requirement.
E. increasingthe Federal Fundsrate,loweringthe discountrate,andsellinggovernment
securities.
212. The Federal Fundsrate isthe rate of interest
A. a bank chargesitsbiggestandbestcommercial customer
B. the Federal Reserve chargesabankwhenthe bankborrowsreserves
C. paidon U.S. TreasuryBills
D. one bank paysanotherwhenborrowingitsexcessreserves
E. the federal governmentchargesbanksforloans
213. Whenthe requiredreserve ratiois12.5% andthe Federal Reserve buys$10 billionof
governmentsecurities,bankactual/legal reserves_____ by $_____ and the potential money
supply_____ by $_____.
A. rise, 10, rises, 40. D. fall, 10, falls, 12.5.
B. rise, 10, rises, 80. e.rise, 10, rises, 125.
C. rise, 10, rises, 87.5.

214. Whichof the graphs above depictsanincrease inexports?
A. Graph A D. Graph D
B. Graph B e.None of these
C. Graph C
215. Free trade baseduponcomparative advantage iseconomicallybeneficial because
A. it promotesanefficientallocationof the world'sscarce resources
B. it increasescompetition
C. it enablescountriestoconsume beyondtheirrespectiveproductionpossibilityfrontiers
D. of all the above reasons
216. Considerthe two-country,two-goodworldgiveninthe table. Accordingtothe principle of
comparative advantage,
Outputperunitof Labor
Beef Pork
USA 6 9
Mexico 3 4.5
A. the US will importbeef fromMexicoandexportporktoMexico
B. the US will exportbeef toMexicoandimportporkfrom Mexico
C. the US will exportbothgoodstoMexico
D. the US will importbothgoodsfromMexico
E. no trade will take place betweenthe USand Mexico
217. The current lawwhichaddressesfoodsecurityandcompetitivenessof the agricultural sector
isknownas
A. Agriculture andFisheriesModernizationAct
B. Agriculture andForestryModernizationAct

C. Agriculture FisheriesandMiningAct
D. Agriculture FarmManagementAct
218. Thisis deliveredbythe presidentof the countryduringthe openingof the annual regular
sessionof the legislative house
A. Speechof the National Address C. State of the NationAddress
B. Special OrganizationforNationalArts D. SpeechforNational Advocacy
219. The country had enteredintothisgroupin1994 as an accessionto global trade development
A. WorldTariff Organization C. WorldTrade Organization
B. Welfare andTrade D. Worldand Trade Organization
220. It isa measure of determiningwhichresource acountryshoulduse abundantlyinordertobe
competitiveinthe exportmarkets
A. RecordCompanyof America C. RevealedComparativeAdvantage
B. Rice and Corn Administration D. Resonance CompetitiveAdvantage
221. A multilateralcontractamongmembercountriestograduallyremovetrade protectionthus
allowingfree trade isknownas
A. General AgreementonTrade and Taxes
B. General Agriculture onTariffsandTrade
C. General AgreementonTariffsandTrade
222. The main recipientsof distributedlandsbyvirtue of CARPare the
A. Agricultural Resource Communities
B. Associationof ReformedCommunities
C. AgrarianReformCommunities
D. Agricultural RehabilitationCenters
223. It isthe agencywhichismainlyresponsibletopromote the welfareof fisherysector
A. Bureauof FreshwaterandAquaculture Resources
B. Bureauof FisheriesandAquaticResources
C. Bureauof Freshwaterand Agricultural Resources
224. The technical relationshipbetweeninputsandoutputsiscalledthe:
A. balance sheet C. productionfunction
B. income statement D. “technostructure”
225. The distinctionbetweenvariableandfixedinputs:
A. can onlybe made in the longrun
B. can be made bycalculatingthe difference betweenaninput’smarginal productandits
average product.
C. isbasedon the time periodunderconsideration.
D. isthat variable inputsare notsubjecttothe law of diminishingreturns.

226. In the short run:
A. all of the firm’sinputsare fixed.
B. at leastone of the firm’sinputsisfixed.
C. none of the firm’sinputsare fixed.
227. The additiontototal outputwhichisdue to the additionof the lastunitof an inputisthe:
A. cost of the input C. average productof the input
B. supplyof the input D. marginal productof the input
228. One reasonfor the appearance of diminishingreturnsisthat:
A. each additional unitwill have proportionatelylessof the otherunitswithwhichtowork.
B. the fixedinputscannotproduce anymore as more unitsof a variable inputare needeD.
C. wheneverinputsare addedtoa productionprocess,outputwill fallbecause of
increasedinefficiency.
D. the marginal productof the input.
229. Which aspectof taxationinvolvespositive economics?
A. the incidence of tax (i.e.whoactuallypaysforthe tax)
B. the effectof the tax onincentives
C. the fairnessof the tax
D. all of the above
230. If for a firm,the price of inputA is 4 timesthe price of inputB, costswill be minimizedfora
givenlevel of outputwhenthe:
A. firmuses4 timesasmuch inputA as inputB.
B. total product of inputA is4 timesgreaterthanthe total productof inputB.
C. average productof inputA is 4 timesgreaterthanthe average productof inputB.
D. marginal productof inputA is4 timesgreaterthanthe average productof inputB.
231. Utilityisa measure of:
A. output. C. satisfaction
B. usefulness. D. indifference
232. If the marginal utilitiesfromconsumingthe first5unitsof a commodityare 10, 16, 15, 12, and
9 respectively,thenthe total utilityreceivedfromconsuming4unitsis:
A. 12 C. 41
B. 27 D. 53
233. The law of diminishingmarginal utilityimpliesthat:
A. as people consume more andmore goodstheirhappinessdiminishes.
B. the marginal utilityof the lastpesospentonfoodequalsthe marginal utilityof the last
pesospendonclothing.
C. the marginal utilitiesof bothgoodsare the same.
D. the marginal utilitiesof bothgoodsare the greatest.

234. If the marginal utilityof fooddividedbythe price of foodexceedsthe marginal utilityof
clothingdividedthe price of clothing:
A. the price of foodistoo highand lessfoodshouldbe purchaseD.
B. the total utilityreceivedfromfoodexceedsthe total utilityreceivedfromclothing.
C. more shouldbe spentonfoodand lessclothing.
D. more clothingshouldbe purchasedtoraise the marginal utilityof the lastdollarspent.
235. Opportunitycostis:
A. the variable costa firmincurs byincreasingoutputone unit.
B. the value of the bestalternative use of afirm’sresources.
C. the outputopportunitiesafirmgainswhenaverage fixedcostdecline.
D. anothername for explicitcosts.
236. The basic difference betweenexplicitandimplicitcostis:
A. explicitcostsare measurable,implicitcostare not.
B. explicitcostsare private costs,implicitcostsre social costs.
C. explicitcostsare fixedcosts,implicitcostsare variable costs.
D. explicitcostsreflectsexternallysuppliedresources,implicitcostsreflect owner-supplied
resources.
237. Short-runcostswhichdo notchange as outputincreasesordecreasesare called:
A. explicitcosts. C. empirical costs.
B. total fixedcosts. D. marginal costs.
238. The additiontototal cost resultingfromthe additionof the lastunitof outputis calledthe:
A. total variable cost. C. fixedcost
B. average variable cost D. marginal cost.
239. A raisingmarginal costcurve will intersectthe:
A. average fixedcostcurve at itsminimumpoint.
B. total cost curve at itsminimum point.
C. productionfunctionatitsmaximumpoint.
D. average variable andaverage total costcurvesat theirminimumpoints.
240. A possible reasonforthe existence of increasingreturnstoscale is:
A. The inabilityof afirmto increase all inputs proportionately.
B. Problemsof coordinationandcontrol.
C. Higherinputprices.
D. Greaterspecialization.
241. A marketconsistingof manyfirmsproducinghomogenousproductshavingcomplete
knowledge of relevantinformation,nopoweroverthe product’smarket price,andlow
barriersto entryischaracteristicof:

A. perfectcompetition C. monopolisticcompetition.
B. monopoly D. oligopoly
242. A marketconsistingmanyfirms,low barrierstoentry,some control overprice,but
considerable nonproce competitionischaracteristicof:
A. perfectcompetition
B. monopoly
C. monopolisticcompetition
D. oligopoly
243. Whichset of characteristicsbestidentifiesanoligopolymarket?
A. manyfirms,homogenousproduct,significant barrierstoentry,significantnonprice
competition,considerablepoweroverprice.
B. fewfirms,differentiatedproduct,nobarrierstoentry,the absence of nonprice
competition,considerableadvertising.
C. one firmproducinga productwithno close substitutes,significantbarrierstoentry,
considerable poweroverprice.
D. fewfirms,differentiatedproduct,significantbarrierstoentry,significantbarriersto
entry,significantamountsof nonpricecompetition.
244. The perfectlycompetitivefirm:
A. strivestoproduce at the lowesttotal costpossible
B. isforcedto respondto price actionsof rival producers
C. cannot affectthe price of itsproduct because of governmentregulation.
D. isable to sell all itcan produce at the prevailingprice
245. A perfectlycompetitive firmfacesademandcurve whichis:
A. downwardsloping
B. greaterthan the marketprice
C. horizontal
D. equal tothe total costs of productionforeach level of output
246. An isoquantis:
A. The locusof pointsthat givesthe combinationof inputsthatgivesmaximumprofit
B. The locusof pointsthat givesthe combinationof inputswhere total productismaximum
C. The locusof pointsthat gives the technicallyefficientcombinationof inputsthatyieldthe
same level of outputs
D. All of the above
247. Marginal revenue:
A. generallyrisesasoutputincreases.
B. exceedsprice underconditionsof monopoly.
C. isthe additiontototal revenue fromthe sale of one more unit.
D. Coincideswithmarginal costateachlevel of output.

248. Whenmarginal revenue exceedsmarginal cost,amonopolistshould:
A. expandoutput. C. raise price.
B. discontinue production D. reduce demanD.
249. A firm’sshutdownpointisthe minimumvalue of:
A. Total Variable cost
B. Average cost
C. Average variable cost
D. Total cost
250. If a price of a fixedfactorof productionincreasesby60 percent,what effectwouldthishave
on the marginal costschedule of a firm?
A. Marginal cost will increase by60 per cent
B. Marginal cost will increase bylessthan60 per cent
C. Marginal cost will increase bymore than60 percent
D. none

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