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Economics 11

Quiz No. 1

1. Define Economics.
2. Why do we need to study Economics?
3. Explain the concept of scarcity.
4. Explain the meaning of efficiency. Why do we strive to be efficient?
5. Differentiate the two branches of economics.
6. What do you mean by ceteris paribus?
7. Compare positive vs. normative economics
8. Define input and output.
9. Define Production Possibilities Frontier (PPF)
10. What do you mean by opportunity cost? Give an example.
11. Given the following demand and supply equations (40 pts):
Demand:
Supply:

Qd
Qs

=
=

200 15 P
100 + 20 P

Where P is the own price of the good and the market prices per unit of the
good are P1.00, P2.00, P3.00, P4.00 and P5.00.
A. Fill in the table below (15 pts):
Price

Quantity
Demanded

Quantity
Supplied

Market Condition

1.00
2.00
3.00
4.00
5.00
B. From the table above, identify the equilibrium price and quantity (2 pts).
C. In a properly scaled graph, plot the market demand and supply curves for
the good at various price levels and identify the equilibrium price and
quantity (5 pts).
D. Interpret the value of the horizontal intercept and the slope for both the
demand and supply equation (10 pts).
E. Using the demand and supply equations above, mathematically compute
for the equilibrium price and quantity (Show solution) (5 pts)
F. If the price established in the market is deemed unaffordable by the
masses, what should the government do? (1 pt)
i. set a minimum price? or
ii. set a maximum price?
G. at what price level (1 pt)
i. at a price lower than equilibrium price
ii. at a price higher than equilibrium price
H. what would be the impact of this policy (1 pt)

Economics 11
Quiz No. 1

1. Define Economics.
2. Why do we need to study Economics?
3. Explain the concept of scarcity.
4. Explain the meaning of efficiency. Why do we strive to be efficient?
5. Differentiate the two branches of economics.
6. What do you mean by ceteris paribus?
7. Compare positive vs. normative economics
8. Define input and output.
9. Define Production Possibilities Frontier (PPF)
10. What do you mean by opportunity cost? Give an example.
11. Given the following demand and supply equations (40 pts):
Demand:
Supply:

Qd
Qs

=
=

200 15 P
100 + 20 P

Where P is the own price of the good and the market prices per unit of the
good are P1.00, P2.00, P3.00, P4.00 and P5.00.
A. Fill in the table below (15 pts):
Price

Quantity
Demanded

Quantity
Supplied

Market Condition

1.00
2.00
3.00
4.00
5.00
B. From the table above, identify the equilibrium price and quantity (2 pts).
C. In a properly scaled graph, plot the market demand and supply curves for
the good at various price levels and identify the equilibrium price and
quantity (5 pts).
D. Interpret the value of the horizontal intercept and the slope for both the
demand and supply equation (10 pts).
E. Using the demand and supply equations above, mathematically compute
for the equilibrium price and quantity (Show solution) (5 pts)
F. If the price established in the market is deemed unaffordable by the
masses, what should the government do? (1 pt)
i. set a minimum price? or
ii. set a maximum price?
G. at what price level (1 pt)
i. at a price lower than equilibrium price
ii. at a price higher than equilibrium price
H. what would be the impact of this policy (1 pt)