PRINCIPLE OF ECONOMICS Renato A Adriano III

MIDTERM 2019-2020

GUIDELINES: A “No Permit No Exam Policy” shall be strictly implemented. No student is

allowed to go out of the classroom. Examinee is advised to approach the proctor silently.
Do not start while you are not told to do so. All answers must be written legibly. If
finished pass your test paper with the test booklet to the proctor and silently go out of
the classroom. You will receive back your test booklet a week after the scheduled
examination.

PRELIMINARIES: On this term the students will be assessed on what they

have learned about the concept of Elasticity, types of Elasticity and
consumer behaviour.

NAME:________________________________________Date:____________________

PART I MULTIPLE CHOICE

Encircle the correct answer

1. This refers to the reaction or response of the buyers to changes in

price of goods and services

a. Elasticity
b. supply
c. Demand Elasticity
d. both a and b

2. This is use to determine the responsiveness of demand to changes in

the price of the commodity.

a. Price Elasticity
b. Original price
c. Price
d. None

3. Is a type of Demand where the quantity that will be bought is

affected greatly by changes in price.

a. Elastic Demand
b. Inelastic demand
c. Unitary Demand
d. None

4. This change in price results to a lesser change in quantity

demanded. For example, a 20% change in price creates a 5% change in
quantity demanded. This means that buyers are not sensitive to price
change.

a. Elastic Demand
b. Inelastic demand
c. Unitary Demand
d. none
5. A change in price results to an equal change in quantity demanded.
For example, a 10% change in price results to a 10% change in quantity
demanded.

a. unitary demand
b. elastic demand
c. inelastic demand
d. none

6. Without change in price, there is an infinite change in quantity

demanded. Such situation occurs in a purely competitive market.

a. Perfectly elastic demand

b. Perfectly inelastic demand
c. Elastic
d. Inelastic

7. A change in price creates no change in quantity demanded.

a. Perfectly elastic demand

b. Perfectly inelastic demand
c. Elastic
d. Inelastic

8. What is that economic concept /theory that states “as price

increases, quantity demanded decreases, and as price decreases,
quantity demanded increases.

a. Law of demand
b. Law of supply
c. Law of elastic
d. Both b and c

9. This refers to the determination of the responsiveness of demand to

a change in a consumer income.

a. Income of Elasticity Demand

b. Income Demand
c. Elastic Supply
d. None

10. The demand for a certain good may be affected also by a change in
the price of another good.

a. Income of Elasticity Demand

b. Income Demand
c. Elastic Supply
d. Cross Elasticity demand

11. A change in price results to a greater change in quantity

supplied. This means that producers are very responsive to price
change. For example, with a 10% increase in price, they increase their
quantity supplied by 20%.

a. Elastic Supply
b. Inelastic Supply
c. Perfectly Elastic Supply
d. Unitary Supply
 12. A change in price results to a lesser change in quantity supplied.
This shows that producers have very weak response to price change.

a. Elastic Supply
b. Inelastic Supply
c. Perfectly Elastic Supply
d. Unitary Supply

13. A change in price results to equal change in quantity supplied.

a. Elastic Supply
b. Inelastic Supply
c. Perfectly Elastic Supply
d. Unitary Supply

14. Without change in price, there is an infinite change in quantity

supplied.

a. Elastic Supply
b. Inelastic Supply
c. Perfectly Elastic Supply
d. Unitary Supply

15. A change in price has no effect on quantity supplied.

a. Inelastic Supply
b. Unitary Supply
c. Perfectly inelastic supply
d. None

PART II ENUMERATION

A. What are the three types of Elasticity of Demand and define each?
16-17.

18-19.

20-21.

B. What are the types of market structures

22.

23.

24.

25.

26.
PART III Problem Solving and Analysis

Be sure to show the formula, indicate the solution and identify the
types of elasticity of demand, 2 points for formula 2 points for
solution and 2 points for identifying the types of Elasticity for a
total of 6 points each problem.

Problem 1 27-32

Original quantity demanded: 10,000 KL

Original price: Php 5.00 per KL
New Quantity Demanded: 16,000 KL
New price: Php 4.00 per KL

Problem 2 33-38

Original quantity demanded: 10,000 KL

Original price: Php 5.00 per KL
New Quantity Demanded: 11,000 KL
New price: Php 4.00 per KL

Problem 3 39-44

Original quantity demanded: 10,000 KL

Original price: Php 5.00 per KL
New Quantity Demanded: 12,000 KL
New price: Php 4.00 per KL

PART IV TRUE OR FALSE write True of the statement is correct and write
False if the statement is wrong.

_____________45. The concept of point elasticity is used when we want

to know relative price elasticity of demand at a given point on
the demand curve to make some decisions about price variation.“The
price elasticity of demand at a particular point on thedemand curve.”

_____________46. Arc elasticity of demand measures elasticity between

two points on a curve – using a mid-point between the two curves.

_____________47. The advantage of the midpoint method is that one

obtains the same elasticity between two price points whether there is
a price increase or decrease. This is because the formula uses the
same base for both cases.

_______________48. We use the point elasticity of demand to calculate

exactly how a change is price affects the demand for a specific good.
We do this by dividing the percent change in quantity demanded by the
percent change in price. An answer greater than 1 means the good
is elastic; less than 1 means the good is inelastic.

_______________49. The Elasticity of Demand measures the percentage

change in quantity demanded for a percentage change in the price.
Simply, the relative change in demand for a commodity as a result of a
relative change in its price is called as the elasticity of demand.
PART V MATCHING TYPE

________50. Perfectly Elastic Demand a. (EP = ∞)

________51. Perfectly Inelastic Demand b. (EP = 0)

________52. Relatively Elastic Demand c. (EP> 1)

________53. Relatively Inelastic Demand d. (Ep< 1)

________54. Unitary Elastic Demand e. (Ep = 1)

________55. Two measure of price elasticity f.point and demand

arc

________56. Demand g. Q

________57. Price h. P

________58. Means showing no bias, or neutral i. indifference

_________59. Refers to the additional j. Marginal Utility

satisfaction of a consumer

________60. Curve that shows different k. indifference

combination of two goods which yield curve
the same level of satisfaction

PART VI DEFINITION AND APPLICATION

61-65: What is the importance of studying Consumer behavior

66-69:What are the main four application of Consumer behaviour
70:Bonus