AGRICULTURAL ECONOMICS

AND MARKETING
1. Normally the demand curve will have a _______________ 14. In May 2019, a firm was providing 5000 kg of sugar at a
shape. market price of Rs. 30 per kg. But in June 2019, the supply
a. Upward sloping of sugar decreased to 4500 kg at a market price of Rs. 20
b. Downward sloping per kg. This change shows that the supply of sugar is
c. Vertical _____.
d. Horizontal a. More elastic
2. Which of the following is an assumption made while b. Less elastic
drawing the demand curve? c. Perfectly inelastic
a. The demand curve must be linear d. Perfectly elastic
b. The price of substitutes should not change 15. If the market supply curve for a product shifts rightwards,
c. The quantity demanded should not change what is the best possible explanation for this shift?
d. The price of the commodity should not change a. Increase in the price of raw materials
3. The elasticity for the demand of durable goods is b. Introduction of a tax on that product by the
__________. government
a. Zero c. Introduction of a new technique that makes the
b. Equal to unity production of that commodity cheaper
c. Greater than unity d. An advertising campaign that is successful in
d. Less than unity promoting the product
4. Law of demand shows a relation between the 16. Which of the following scenarios will not shift the demand
___________. curve for a particular product?
a. Quantity demand and quantity supply of a a. A change in the income of the consumers of that
commodity product
b. Income and quantity demand of a commodity b. Effective advertising campaign by producers of a
c. Price and quantity of a commodity substitute good
d. Income and price of a commodity c. A reduction in the price of the raw material for
5. If the quantity demanded of a commodity is unresponsive that product
to change in prices, then the demand of that commodity is d. A widely publicized study that says the product is
________. harmful to the health of consumers
a. Perfectly inelastic 17. A firm’s supply curve is on an upward slope because
b. Elastic ______.
c. Unit elastic a. The production costs of additional units of output
d. Inelastic will rise beyond a point
6. When the price of a product falls by 10% and its demand b. Consumers see a positive relationship between
rises by 30%, then the elasticity of demand is _________. price and quality
a. 13 c. Expansion of production leads to the use of
b. 3 inferior inputs
c. 10 d. None of the above
d. 30 18. Which of the following scenarios will not lead to a change
7. When the elasticity of demand for a commodity is very in demand for a product?
low, it shows that the product ________. a. A change in the tastes of its consumers
a. Has little importance in the total budget b. A change in the price of that product
b. Is a luxury c. An increase in the income of its consumers
c. Is a necessity d. None of the above
d. None of the above 19. ______ leads to an increase in the supply of a commodity
8. Which of the following is not a cause of the shift in demand without a change in its price.
for a product? a. Rise in supply
a. Change in the price of substitutes b. Contraction in supply
b. Change in the income of a consumer c. Expansion in supply
c. Change in the price of a product d. Fall in supply
d. None of the above 20. If price changes by 1% and supply changes by 2%, then the
9. When the demand for a product is perfectly inelastic, a supply is ______.
price increase will result in __________. a. Static
a. A decrease in quantity demanded of the product b. Indeterminate
b. No change in the total income from a product c. Inelastic
c. An increase in the total income from a product d. Elastic
d. A reduction in the total income from a product 21. If the income of a consumer increases or the price of a
10. In case the price of a product and the total revenue from complementary good falls, then the __________.
that product move in the same direction, then the demand is a. The demand curve for the product shifts
____________. rightward
a. Perfectly elastic b. The demand curve for the product shifts leftward
b. Inelastic c. The supply curve for the product shifts rightward
c. Elastic d. The supply curve for the product shifts leftward
d. Unrelated 22. Because of increasing marginal costs, most supply curves
11. Would an increase in demand for a product cause the ________.
supply curve to shift in any direction? a. Have a positive slope
a. No effect on supply b. Have a negative slope
b. Change in the slope of a supply curve c. Are horizontal
c. The supply curve will move to the right d. Are vertical
d. The supply curve will move to the left 23. Which of the following metrics is not a constant factor
12. If the elasticity of supply is greater than one, the supply while moving upwards along the supply curve?
curve would be _______. a. The price of the commodity
a. Touching y-axis b. The number of sellers
b. Passing through the origin c. Expected future prices
c. Vertical d. Cost of the resources used for producing that
d. Horizontal commodity
13. In a particular year, the farmers experienced dry weather. If 24. An increase in the number of restaurants serving fast-food
all other factors remain the same, the supply curve of wheat leads to _______.
for farmers will shift to the ________ direction. a. Growth in the demand of fast-food meals
a. Downward b. Increase in the supply of fast-food meals
b. Rightward c. Increase in the price of fast-food meals
c. Leftward d. Growth in the demand for substitutes of fast-food
d. None of the above meals
25. When the quantity demanded of a goods is equal to the
quantity supplied of that goods, then ___________.
a. There is a surplus
b. The government is intervening in the market
c. There is a shortage
d. None of the above
26. The market demand curve shows
a. the effect on market supply of a change in the
demand for a good or service.
b. the quantity of a good that consumers would
like to purchase at different prices.
c. the marginal cost of producing and selling
different quantities of a good.
d. the effect of advertising expenditures on the
market price of a good.
27. At a price of 287.00 pesos, a pulp fiction novel is expected
to sell 9,000 copies. If the novel is offered for sale at a
price of 229.00 pesos, then the publisher can expect to sell
a. less than 9,000 copies.
b. 9,000 copies.
c. more than 9,000 copies.
d. It is impossible to predict the effect of a lower
price on sales.
28. During a recession, economies experience increased
unemployment and a reduced level of activity. How would
a recession be likely to affect the market demand for new
cars?
a. Demand will shift to the right.
b. Demand will shift to the left.
c. Demand will not shift, but the quantity of cars
sold per month will decrease.
d. Demand will not shift, but the quantity of cars
sold per month will increase.
29. The market supply curve shows
32. If automobile manufacturers are producing cars faster than
people want to buy them,
a. there is an excess supply and price can be
expected to decrease.
b. there is an excess supply and price can be
expected to increase.
c. there is an excess demand and price can be
expected to decrease.
d. there is an excess demand and price can be
expected to increase.
33. If a computer software company introduces a new program
and finds that orders from wholesalers far exceed the
number of units that are being produced,
a. there is an excess supply and price can be
expected to decrease.
b. there is an excess supply and price can be
expected to increase.
c. there is an excess demand and price can be
expected to decrease.
d. there is an excess demand and price can be
expected to increase.
34. Market equilibrium refers to a situation in which market
price
a. is high enough to allow firms to earn a fair
profit.
b. is low enough for consumers to buy all that
they want.
c. is at a level where there is neither a shortage
nor a surplus.
d. is just above the intersection of the market
supply and demand curves.
35. If the price of a good increases while the quantity of the
good exchanged on markets increases, then the most likely
explanation is that there has been

a. the effect on market demand of a change in the a. an increase in demand.

supply of a good or service. b. a decrease in demand.
b. the quantity of a good that firms would offer c. an increase in supply.
for sale at different prices. d. a decrease in supply.
c. the quantity of a good that consumers would
be willing to buy at different prices. 36. If the price of a good decreases while the quantity of the
d. All of the above are correct. good exchanged on markets increases, then the most likely
explanation is that there has been
30. At a price of 17, 397.5 pesos, the manufacturer of a
portable gas-powered generator is willing to produce a. an increase in demand.
19,000 units per quarter. At a price of 20, 297.5 pesos, it is b. a decrease in demand.
likely that the manufacturer will be willing to produce c. an increase in supply.
d. a decrease in supply.
a. more than 19,000 units per quarter.
b. 19,000 units per quarter. 37. If the price of a good increases while the quantity of the
c. less than 19,000 units per quarter. good exchanged on markets decreases, then the most likely
d. It is impossible to predict the effect of a higher explanation is that there has been
price on the number of units of a product that a
firm will be willing to produce.
a. an increase in demand.
b. a decrease in demand.
31. Unionized workers may be able to negotiate with c. an increase in supply.
management for higher wages during periods of economic d. a decrease in supply.
prosperity. Suppose that workers at automobile assembly
plants successfully negotiate a significant increase in their
wage package. How would the new wage contract be likely 38. If the price of a good decreases while the quantity of the
to affect the market supply of new cars? good exchanged on markets decreases, then the most likely
explanation is that there has been
a. Supply will shift to the right.
b. Supply will shift to the left. a. an increase in demand.
c. Supply will not shift, but the quantity of cars b. a decrease in demand.
produced per month will decrease. c. an increase in supply.
d. Supply will not shift, but the quantity of cars d. a decrease in supply.
produced per month will increase.
39. An increase in the demand for a good will cause
a. an increase in equilibrium price and quantity.
b. a decrease in equilibrium price and quantity.
c. an increase in equilibrium price and a decrease
in equilibrium quantity.
d. a decrease in equilibrium price and an increase
in equilibrium quantity.
40. An increase in the supply of a good will cause
a. an increase in equilibrium price and quantity.
b. a decrease in equilibrium price and quantity.
c. an increase in equilibrium price and a decrease
in equilibrium quantity.
d. a decrease in equilibrium price and an increase
in equilibrium quantity.
41. Assume that firms in an industry observe a 10% increase in
the productivity of labor, but to get there they had to
increase the cost of labor by 5%. What should be expected
to happen in the output market as a result of this
development?
a. The supply should increase
b. The supply should decrease
c. The supply should remain unchanged
d. The demand should increase
e. The demand should decreased
42. During 2002 – 2005 we saw significant increases in the
construction of new housing stock in the Philippines.
During the same time period we also observed significant
rises in the demand for homes. We know that during that
time period both price and the level of homes traded
increased. Based on that information what most likely
happened in the market?
a. The rise in supply outpaced the rise in
demand.
b. The rise in demand outpaced the rise in
supply.
c. The rise in demand was perfectly matched by
rise in the supply.
d. None of the above
43. If a rise in supply exceeds a rise in demand, then we should
expect
a. the equilibrium price and quantity levels will
rise.
b. the equilibrium price will rise while the
equilibrium quantity will decline.
c. The equilibrium price will fall while the
equilibrium quantity will rise.
d. the equilibrium price and quantity levels will
decline.
44. In which instance will both the equilibrium price and
quantity rise?
a. When demand and supply increase, but the
rise in demand exceeds the rise in supply.
b. When demand and supply increase, but the
rise in supply exceeds the rise in demand.
c. When demand and supply decline, but decline
in the demand exceeds the decline in supply.
d. When demand and supply decline, but the
decline in supply exceeds decline in the demand.
45. In which instance can we observe a rise in the equilibrium
price accompanied by a decline in the equilibrium quantity?
a. If both demand and supply decline, but the
decline in demand exceeds the decline in supply.
b. If supply declines while demand increases,
and the decline in supply exceeds the increase in
demand.
c. If both demand and supply increase.
d. None of the above.
46. To be an importer of a product the country must have its
domestic price of the product be _____ the foreign price
a. higher than
b. lower than
c. equal to
47. To be an exporter of a product the country must have its
domestic price of the product be _____ the foreign price
a. higher than
b. lower than
c. equal to
48. Which of the following will help a country become an
exporter of a product (assume that the product is a normal
good given the median consumer income)?
a. An increase in incomes of domestic
consumers
b. A recession abroad
c. An increased productivity of domestic labor
d. An increased cost of domestic labor
49. In 2010 Russia was affected by a significant draught.
Russia is a major producer and exporter of several
agricultural commodities. As a result of the draught, Russia
reduced some of its agricultural exports. In the context of
the world supply/demand model for the affected
agricultural commodities we should observe:
a. Reduced demand and reduced supply
b. Reduced supply and unchanged demand
c. Reduced supply and increased demand
d. Increased supply and unchanged demand
e. Increased supply and reduced demand
50. In November of 2010 the US Central Bank, the Federal
Reserve, embarked on a policy of quantitative easing. Since
this policy essentially represents an increase in the supply
of money, it may create inflationary expectations. Let’s
assume (and this is a strong assumption), that as a result of
this policy, US households start to expect inflation (price
increases) in the housing market. The effect on the housing
market will be:
a. A rise in the demand, causing prices to
increase
b. A rise in the supply, causing prices to
decrease
c. A decline in the demand, causing prices to
decrease
d. None of the above