STATE UNIVERSITIES AND COLLEGES – ASSOCIATION OF COLLEGES

OF AGRICULTURE IN THE PHILIPPINES (SUC-ACAP)

REVIEW QUESTIONS
FOR THE LICENSURE EXAMINATION FOR AGRICULTURE

Agricultural Economics

August 2021
ISBN #

All rights reserved. No part of this review material may be used or reproduced in any manner
without written permission from the State Universities and Colleges-Association of Colleges
of Agriculture in the Philippines (SUC-ACAP).

9
 TABLE OF CONTENTS

Preface iv

Foreword vi

List of Writers/Contributors vii

Factors of Production 15

Demand and Elasticity 16

Supply and its Elasticity 17

Consumption, Savings and Investment 19

Monetary and Fiscal Policy 21

Agriculture and Economic Growth 24

International Economics 32

Packaging and Labeling 37

Marketing Margins and Costs 40

Price and Output Determination 41

10
 PREFACE

Republic Act 8435 or the Agriculture and Fisheries Modernization Act of 1997, simply
known as AFMA, was enacted on December 22, 1997. It is a policy instrument defining
measures to modernize Philippine agriculture for the country to compete in the global market.
A basic human resource development framework in modernizing agriculture under the Act is
to enhance the professional competency of agriculturists by upgrading the standards of the
agriculture and fisheries education that will ensure to similarly upgrade the quality and
sustainability of, and promote global competitiveness, at all levels.

One strategy for professionalizing the agriculture sector is the Licensure Examination
for Agriculturists (LEA). First implemented in 2003, LEA serves as a standardized evaluation
tool to identify graduates of Agriculture and Agriculture-related degree programs who are
academically and technically fit to be admitted in the agricultural profession. The three-day
examination consists of multiple-choice type questions in the following component subjects:
Crop Science, Soil Science, Crop Protection, Animal Science, Agricultural Economics and
Marketing, and Agricultural Extension and Communication.

The COVID-19 pandemic has been a major concern of all higher education institutions.
When review sessions for licensure board exams are already supposed to be grinding, SUCs
are confronted by the reality that face-to-face review is undeniably not possible. Under the
circumstance, universities face new pressures to provide an engaging, motivating, and
effective teaching and learning experiences for both reviewees and reviewers.

Following this, the SUC-ACAP, with its goal of advancing the agriculture professional
competency among their member-institutions, and the College of Agriculture and Food
Science, UP Los Baños embarked on a joint initiative to enhance the capability of the SUC
faculty particularly those engaged in the conduct of review classes in preparation for the
Licensure Exam for Agriculture (LEA). To achieve this, the joint initiative conducted three
online lectures, namely, 1) Innovative Teaching Methods and Tools Designed for Online
Review Classes by no less than the Chancellor of the UP Open University, Dr. Melinda dP.
Bandelaria. This online course aimed at introducing the faculty participants to the
particularities of conducting review classes online with the use of innovative methods and
tools; 2) Test Construction: the Multiple-Choice Type Test from a seasoned UP faculty, Dr.
Blanda R. Sumayao, which gave the faculty-participants the opportunity to review the
principles and rules for constructing multiple-choice type tests; and 3) Design and
Development of Review Materials for LEA, again with Dr. Bandelaria with the objective of
providing the faculty-participants the necessary knowledge and skills in designing and
developing review materials and planning for the delivery of online review sessions.

11
 The Project initiative also gave the faculty-participants the opportunity to review their
course syllabus viz-a-viz CMO #14 S. 2008 or the CHED-prescribed outline which enabled
them to design and develop this harmonized syllabus for each of the six core subject matter
area. The review materials are thus a product of many minds and talents, that is, of faculty-
participants from the different SUCs. I would like to acknowledge all the writers/contributors
who willingly presented themselves to the initiative and for strictly following deadlines in
submitting drafts; to all University Presidents and the Deans of the Colleges of Agriculture who
have been highly committed to the objective of this Project initiative and for the support
provided to the faculty-participants; to all Cluster and Sub-Cluster Coordinators for the
constant reminders and follow-ups; and to the SUC-ACAP Secretariat for the untiring
administrative support.

And lastly, we are grateful to the College of Agriculture and Food Science, UP Los Baños
for being true to its commitment of being a public service University, providing scholarly and
technical assistance to its sister and brother SUCs. Specifically, we thank the Subject Area
Coordinators/Specialists who unselfishly guided our faculty participants throughout their
journey in the project, as well as the Technical Assistants and Administrative Staff who have
lend full support to attaining the objectives of the joint initiative.

As I have always reiterated in many occasions, let us be reminded that student

preparation for the licensure is just one of the factors that would determine performance. It is
still incumbent upon us to ensure that we will be able to provide the necessary prerequisite
services and institutional support in order for students to ultimately pass successfully and help
advance the students’ professional careers post licensure exam.

The preparation for publication of these review materials was supported by the SUC-
ACAP.

EDGARDO E. TULIN, PhD

President, SUC-ACAP

/August 2021

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 FOREWORD

Unlike in Lord of the Rings and Harry Potter films, there are no wizards, Balrogs,
Voldemort, precious rings, or elderly wands, on the journey to becoming a professional
agriculturist. But there are narrow bridges and mazes that you must travel and cross over.
One of these challenges is the Professional Licensure Exam for Agriculture.

In the current climate where globalization, changing natural conditions, production, and
social composition; migratory movements, among others, have significantly impacted most
agricultural landscapes in the developing world, more than ever, the Licensure Exam for
Agriculture has become all the more relevant as it prepares graduates of Agriculture to
embrace the tasks ahead of them with utmost professionalism by way of recognizing their
expert knowledge and practice. The Licensure Examination for Agriculture was established
to recognize the expert knowledge and practice of aspiring professional agriculturists.

This Review Material produced by the faculty participants of the joint initiative of the
UPLB College of Agriculture and Food Science (UPLB-CAFS)- State Universities and
Colleges-Association of Colleges of Agriculture in the Philippines (SUC-ACAP) is a
comprehensive resource that covers all the six core subject areas in the field of agriculture
namely, Agricultural Economics, Agricultural Extension, Animal Science, Crop Protection,
Crop Science, and Soil Science. I commend the faculty of the CAFS who unselfishly devoted
their time in coaching and mentoring the faculty participants as well as in providing direction
during the development of the review materials. The materials hope to serve as a valuable
review tool to students of SUC-ACAP member institutions.

I wish you the best in your journey and beginning your career as a professional
agriculturist.

ELPIDIO M. AGBISIT JR., PhD

Dean
College of Agriculture and Food Science
UP Los Baños

/August 2021

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 LIST OF WRITERS/CONTRIBUTORS

Name SUC
1) Dr. Elisa S. Della PSU
2) Ronel V. Maximo CapSU
3) Dr. Rufina Capuno VSU
4) Emily S. Adora UEP
5) Marilyn Mayores MSU
6) Dr. Zoila M. Duque BPSU
7) Jairus Jesse M. Tubal CLSU
8) Mariss DO Inducil CLSU
9) Dr. Rogelio D. Cosio PSAU
10) Annar L. Gonzales PSAU
11) Rodel L. Oclaret ASSCAT
12) Liza May Lamban USeP
13) Maria Hazel I. Bellezas VSU
14) Brigette Catalan USeP

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FACTORS OF PRODUCTION1

1. According to Munir Kamal (2010) in his book “Economics”, what combination of factors
of production enabled the production of goods and services?
A. Land
B. Capital
C. Labor
D. Entrepreneurship
E. All of the above

2. Which of the following is not a feature or characteristic of land in the production process?
A. Land is a natural gift.
B. It is geographically immobile.
C. Land cannot appreciate or depreciate in terms of value.
D. It is abundant in some areas and scarce in other areas.
E. None of the above

3. Labor includes all forms of productive human efforts put into or utilized in production.
Which of the following statement is not correct in relation to labor in production?
A. Labor is a factor of production.
B. Human effort can be intellectual or mental, manual or physical, provided it is
directed towards the production of goods and services.
C. Labor is not mobile and had feelings and cannot be used anyhow.
D. Refers to man’s mental and physical exertions generated in the process of
production.
E. Labor is a variable input.

4. Capital includes all man-made productive assets which are used in production. Which of
the statements are features or characteristics of capital?
A. Capital is also a factor of production.
B. Examples of capital are hoe, machineries, farm building, equipment etc.
C. It can depreciate or appreciate.
D. The reward for capital is interest.
E. All of the above

5. Entrepreneurship, as a factor of production, can best described as:

A. Increase the productive efficiency of a firm.
B. Even though entrepreneurship is neither land, labor or capital, most place
entrepreneurs in the same critical category as more consistently identified factors
of production.
C. Entrepreneurship is the ability of an individual to provide the right kind of good or
service at the right place and time, to the right people at the right price.
D. A person who puts together or organizes the other factors of production (land, labor
and capital) to produce goods and services
E. A, B, C and D

1
Dr. Elisa S. Della (PSU)

15
6. Which of the following statements can best describe the importance of land in an
agricultural enterprise?
A. Land is used for the cultivation of food crops such as corn, rice, cowpea etc.
B. It is also used for the cultivation of cash crops, e.g. cocoa, rubber and oil palm.
C. It is used for the rearing of animals.
D. It is used for forest development.
E. All of the above

7. Most of the statements below describe the importance of labor in agricultural enterprise.
Which of these statements is incorrect?
A. It uses other factors for production.
B. Intellectual labor do not ensure high agricultural production.
C. Skilled labor provides the expertise required for major farm operations.
D. Labor ensures the success of any agricultural enterprise.
E. None of the above

8. An entrepreneur is a person who organizes the other factors and undertakes the risks and
uncertainties involved in the production. These statements best described the features or
characteristics of an entrepreneur. Which of these descriptions is not appropriate?
A. An entrepreneur is a person who organizes the other factors and undertakes the
risks and uncertainties involved in the production.
B. He hires the other three factors, brings them together, organizes and coordinates
them so as to earn maximum profit.
C. An entrepreneur acts as a boss and decides how the business shall run.
D. He do not decide in what proportion factors should be combined.
E. Entrepreneur also help drive change with innovation, where new and improved
products enable new markets to be developed.

DEMAND AND ELASTICITY2

9. The demand curve is sloping downward means ____ .

A. Price and quantity are directly related
B. Price and quantity are inversely related
C. Price and quantity are not related
D. Price and quantity are positively correlated

10. If the price of milo increases, then ____ .

A. consumers will buy more milo.
B. consumers will buy less milo.
C. consumers will buy the same amount of milo.
D. cannot tell with the information given.

2
Ronel V. Maximo (CapsSU)
16
11. Over the past century, the quantity of potatoes purchased by Irish consumers has fallen
significantly, while income have grown exponentially. Meanwhile, potatoes are still the
cheapest source of calories available to the consumer. From this information, it would be
correct to assume that potatoes are a ________ good.
A. Essential
B. Inferior
C. Normal
D. Substitute

12. A change in demand _______.

A. is caused by change in price.
B. is represented by a movement in one point to another in demand curve.
C. is caused by a change in any of the determinants in demand other than price and
is represented by a shift of the entire demand curve.
D. None of the above

13. If the price of pork is expected to increase in the future, then:

A. the demand for pork will increase today
B. the demand for pork will decrease today
C. the quantity demanded of pork will increase today
D. the quantity demanded of pork will decrease today

SUPPLY AND ITS ELASTICITY3

14. If we state that “when the price of a good increases, the quantity supplied also increases”,
we refer to the law of:
A. diminishing return
B. increasing costs
C. Supply
D. Demand

15. When there is an increase in the prices of raw materials, we expect that the supply of a
good in question will:
A. Decrease
B. Increase
C. both increase or decrease
D. remain unchanged

3
Dr. Rufina Capuno (VSU)

17
16. The graph below shows the movement from S1S1 to S2S2 that is caused by:

A. A decrease in the price of the product

B. An increase in price of inputs
C. An improvement in technology
D. An increase in income

17. Holding the non-price factors of supply constant, a change in its own of a good in question
will cause:
A. A change in supply
B. A movement along a given supply curve
C. A shift in demand
D. An increase in price only

18. The following are the determinants of supply, except:

A. Tastes and Preferences
B. Number of sellers
C. Cost of production
D. Taxes and subsidies

19. If at a given moment, producers can’t change the quantity supplied (no matter what the
price is), the momentary supply ________.
A. has zero elasticity
B. has infinite elasticity
C. does not exist
D. has unit elasticity

20. If a rise in the price of bananas from P50.00 to P70.00 per kilo increases the quantity in
kilos of bananas supplied in the market from 5,000 to 8,000 kilos, the
A. supply is unit elastic
B. supply is perfectly inelastic
C. supply of bananas is inelastic
D. supply of bananas is elastic

18
21. If a 1% decrease in the price of a kilo of mangoes results in a smaller percentage decrease
in the quantity supplied, then ____.
A. demand is inelastic
B. supply is inelastic
C. demand is elastic
D. supply is elastic

22. If a 5% increase in the price results in a 9% increase in quantity supplied, the elasticity of
supply is
A. 0.30
B. 1.80
C. 0.55
D. 1.20

23. If a 50% increase in price results in a 33% increase in the quantity supplied, the elasticity
of supply is
A. 0.66
B. 1.66
C. 0.30
D. 1.20

CONSUMPTION, SAVINGS AND INVESTMENT4

24. The value of consumption when income is zero is ______________________

A. The amount of fixed consumption
B. Less than the fixed consumption
C. Greater than the disposable income
D. Any of the foregoing

25. The marginal propensity to consume (MPC) refers to the _______________.

A. The proportion, or fraction, of any change in income consumed.
B. The ratio of a change in consumption to a change in the income that caused the
consumption change.
C. Any of the foregoing
D. All of the foregoing

26. When income is equally distributed, it will result in _____________________

A. Many will have the opportunity to consume and consumption will be high.
B. The rich people getting the lion share of the income
C. Many poor are deprived to consume and consumption is low.
D. All of the foregoing

4
Emily S. Adora (UEP) and Marilyn Mayores (MSU)

19
27. The marginal propensity to save (MPS) is defined as ______________________
A. the change in saving as disposable income changes.
B. As the ratio of change in saving and change in income over a period of time.
C. A rate of change in saving vis-a-vis income.
D. All of the foregoing

28. Income is fully generated when _________________________________

A. The inflow has been fully drained off from the system as savings
B. Savings gradually decreases the inflow that the system circulates and generates
into income,
C. There is none left for another round of circulation, thus, the multiplier process is
completed.
D. All of the foregoing

29. The sum of the MPC and the MPS for any change in disposable income
A. Less than 1.
B. Must always be 1.
C. Greater than 1.
D. Is zero

30. Which of the following statements is correct?

A. If gross investment is greater than depreciation in any period, net investment is
positive and the capital stock increases.
B. If gross investment is less than depreciation in any period, net investment is
negative and the capital stock declines.
C. Monetary policy has a significant influence on residential investment.
D. All of the foregoing

31. Autonomous investment is _________________

A. It is that part of investment which is fixed and most needed to complete
production activity.
B. It is dependent of the level of income or value of output generated in the
production process.
C. It is affected by a change in the level of income, profit, interest rate and output
generated in the production process
D. At a specific level of national income, investment remains the same.

32. Which of the following increases the economy’s overall productive capacity?
A. High level of labor and other resources
B. Changes in supply
C. Changes in demand
D. larger physical capital stock

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33. An increase in an economy’s stock of capital results in
A. shifts its production possibilities curve inward
B. shifts its production possibilities curve outward
C. shift in the long-run aggregate supply curve to the right
D. b & c

MONETARY AND FISCAL POLICY5

MONETARY POLICY
34. Which of the following is NOT an objective of the Banko Sentral ng Pilipinas?
A. To maintain monetary stability in the Philippines;
B. to create credit
C. To preserve the international value of the peso and convertibility of the peso into
other freely convertible currencies; and
D. To promote a rising level of production, employment and real income in the
Philippines.

35. Which of the following are Functions of a Central Bank?

i. Bank of Currency Issue.
ii. Acts as Government Banker Agent and Adviser
iii. Banker’s Bank.
iv. Custodian of the Country’s Foreign Exchange Reserves.
A. i and iii
B. ii and iv
C. I, iii and iv
D. i,ii,iii and iv

36. The action of the BSP on monetary policy is to address the following specific objectives
except ______.
A. To manage the supply and cost of money and credit;
B. To influence overall demand for goods and services;
C. To attain price stability rates
D. to balance the activities of sourcing out funds and its uses.

37. It is composed of banking institutions and nonbank financial intermediaries, including

commercial banks, specialized government banks, thrift banks and rural banks.
A. Financial System
B. Money Supply
C. Credit Institutions
D. Monetarists

5
Dr. Zoila M. Duque, BPSU

21
38. The monetary policy is used to address the following specific objectives except ______.
A. To manage the supply and cost of money and credit;
B. To influence overall demand for goods and services;
C. To attain price stability rates
D. To liberalize credit

39. What is this type of monetary policy which is applied to reduce the money supply by
controlling the volume of money through higher interest rates?
A. Contractionary monetary policy
B. Expansionary monetary policy
C. Open Market suasion
D. Reserve required ratio

40. Suppose the required reserve ratio is 100%. Which of the following statement is correct?
i. The banking multiplier is one.
ii. An increase in deposits will raise the money supply by the same amount.
iii. Nobody is willing to borrow from banks.
iv. The amount of money loans made by the banks is equal to the amount of deposits.

A. i and ii
B. iii and iv
C. I and iv
D. ii and iii

41. Suppose the required reserve ratio is 25% and the initial deposit is P5000. Find the
maximum increase in deposits.
A. P20,000
B. P1250
C. P5250
D. P525000

42. Considering that the initial deposit is P5000, with a required reserve ratio of 25%, what is
the maximum banking multiplier?
A. 0.25
B. 4
C. 20,000
D. 200

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FISCAL POLICY6

43. It is defined as the estimated schedule of expenditures and sources of financing financial
plan for a given fiscal year income, expenditures and sources of borrowings of government.
A. National Budget
B. National Borrowings
C. Public Expenditures
D. Public Budget

You may consider the diagram and answer the following questions:

44. Which of the components of national budget appropriated with the biggest mark?
A. Infrastructure
B. Education
C. Defense
D. Agriculture

45. Which of the following items should not be considered as source of fund for national fund?
A. Sale of performing assets of government
B. Taxes and duties
C. Borrowings from local and foreign financial markets
D. Money creation

6
Dr. Zoila M. Duque (BPSU)

23
46. Which does not belong to the external sources for financing?
A. Treasury Bonds
B. Zero-coupon Treasury Bills
C. Global Bonds
D. Foreign Currencies

47. What is the stage of the business cycle when economy grows and expands and a state of
economic prosperity is achieved?
A. Contraction
B. Trough
C. Expansion
D. Peak

48. The primary objectives of fiscal policy in advance economies is ______.

A. to maintain the condition of full employment,
B. economic stability and
C. to stabilize the rate of growth.
D. All of the above

49. Contractionary Fiscal Policy is used during economic booms. Too much expansion will
result to ____________, which is dangerous to the economy, thus government tries to slow
them down to a more manageable level and control inflation.
A. economic downturns
B. economic fever
C. economic contraction
D. economic depression

50. It estimates taxation and regulates government spending which must be in line with the
monetary policy undertaken by the government.
A. Monetary Policy
B. Fiscal Policy
C. Tax policy
D. National Budget Policy

AGRICULTURE AND ECONOMIC GROWTH7

51. This is the productive sector of the economy that covers all the activities that farmers of
fruits and crops, livestock and poultry raisers, aquaculture and capture fisheries and forestry
products do that help sustain the global human population by providing food and other
products.
A. Agriculture
B. Farming
C. Food Sector
D. Services Sector

7
Jairus Jesse M. Tubal (CLSU)

24
52. This is a collective term used by economists that refers to the body of knowledge and tools
that makes the production of goods and services.
A. Machine and equipment
B. Process
C. Technology
D. Production

53. Technologies can be classified based on how land is used and whether the farming
technology is land-intensive or land-extensive. Which one best describes land-extensive
farming?
A. Use of small amounts of labor and capital in relation to land area
B. Use of huge amounts of labor and capital in relation to land area
C. Yield depends on more controllable factors of production
D. None of the above

54. This is helpful in distinguishing land-intensive and land-extensive technologies from each
other.
A. Gross Profit
B. Total Investment Cost
C. Gross Costs and Gross Returns
D. Gross Costs and Gross Returns per hectare

55. Which does not belong to the group?

A. Agricultural
B. Commercial
C. Industrial
D. Residential

56. This is a subsector of the industrial sector that are involved in the processing and value-
adding activities of agricultural commodities.
A. Agro-services sector
B. Agro-industrial sector
C. Industrial sector
D. Manufacturing sector

57. They are more concerned with utility-addition rather that value-addition.
A. Agro-services sector
B. Agro-industrial sector
C. Commercial sector
D. Manufacturing sector

58. This is the increase in a country’s production or income per capita.

A. Economic growth
B. Economic development
C. Sustainable Development
D. Improvement in Welfare

25
59. One of the classic illustrations of economic growth can be presented using _____. This is
a graph that shows various combinations of outputs x and y (e.g. food and machines) that can
be produced given a fixed amount of resource.
A. Isoquant
B. Isocost
C. Production Possibilities Frontier
D. Lorenz Curve

60. An improvement in the technology will increase the level of outputs because it will require
less costly and less quantities of inputs. This is illustrated in the Production Possibilities
Frontier as an:
A. Inward Shift of the PPF
B. Leftward Shift of the PPF
C. Outward Shift of the PPF
D. None of the above

61. Which among the following statements is/are correct?

A. National income is the total value of goods and services that are produced in an
economy within a certain boundary
B. The computation of national income relies on the collection of large amounts of
data.
C. National income is usually measured using monetary values
D. All of the above

62. This is the total final output of goods and services produced by the country’s economy,
within the country’s territory, by residents and nonresidents, regardless of its allocation
between domestic and foreign claims.
A. Gross National Product
B. Gross National Income
C. Gross Domestic Product
D. Gross Value Added

63. This refers to all market values of outputs of domestic producers as well as labor abroad
and subtracts any payments repatriated by foreigners back to their countries.
A. Gross National Product
B. Gross National Income
C. Gross Domestic Product
D. Gross Value Added

64. It comprises gross domestic product (GDP) plus factor incomes accruing to residents from
abroad, less the income earned in the domestic economy accruing to persons abroad.
A. Gross National Product
B. Gross National Income
C. Gross Domestic Product
D. Gross Value Added

26
65. This is the process of increasing the efficiency of a society’s way of providing its needs and
wants with the end-result of increasing per capita levels of living and general welfare.
A. Economic Development
B. Development
C. Economic Growth
D. None of the above

66. The basic goods and services, such as food, clothing, and shelter, that are necessary to
sustain an average human being at the bare minimum level of living.
A. Sustenance
B. Self-esteem
C. Freedom
D. None of the above

67. The feeling of worthiness that a society enjoys when its social, political, and economic
systems and institutions promote human values such as respect, dignity, integrity, and self-
determination
A. Sustenance
B. Self-esteem
C. Freedom
D. None of the above

68. A situation in which a society has at its disposal a variety of alternatives from which to
satisfy its wants and individuals enjoy real choices according to their preferences.
A. Sustenance
B. Self-esteem
C. Freedom
D. None of the above

69. Development-focused policies or development agenda should be specific on which goal it

is trying to address. Which among the following is not a goal of development?
A. Increase availability of food, shelter, health and protection
B. Increase government expenditures on physical infrastructures
C. Raise incomes, provide more jobs, better education, greater attention to cultural
and human values
D. Expand the range of economic and social choices available to individuals and the
nation

70. A measure that considers the weighted average of prices of a basket of consumer goods
and services, such as transportation, food and medical care.
A. Inflation rate
B. Consumer Price Index
C. GDP Deflator
D. Real GDP

27
71. This is an alternative measure of economic development which considers the process of
enlarging people’s choices.
A. Physical Quality of Life Index
B. Human Development Index
C. Power Distance Index
D. None of the above

72. This entails more than the lack of income and productive resources to ensure sustainable
livelihoods. Its manifestations include hunger and malnutrition, limited access to education
and other basic services, social discrimination and exclusion as well as the lack of participation
in decision-making.
A. Inequality
B. Poverty
C. Insecurity
D. Instability

73. This is a graphical presentation of how wealth is distributed to an economy.

A. Isoquant
B. Isocost
C. Production Possibilities Frontier
D. Lorenz Curve

74. This is a statistical measure of degree of variation or inequality.

A. GNI index
B. Gini Index
C. Inefficiency Index
D. Poverty Threshold

75. This is a kind of development that meets the needs of the present without compromising
the ability of future generations to meet their own needs.
A. Economic Development
B. Human Development
C. Agricultural Development
D. Sustainable Development

AGRICULTURAL LAWS AND POLICIES8

76. This policy is one of the banner programs of the Department of Agriculture mandated to
contribute for attainment of the food-self-sufficiency, economic growth and enhancement of
consumer’s health and welfare.
A. Coconut Preservation Act of 1995
B. Organic Agriculture Act of 2010
C. Seed Industry Development Act of 1992
D. High-Value Crops Development Act of 1995

8
Mariss DO Inducil (CLSU)

28
77. It was the instrument that defined the measures of modernizing Philippine agriculture for
the country and make it competent in the global market. It aims to transform the agriculture
and fisheries sectors to technology-based, advanced and competitive industry.
A. Republic Act No.8435
B. Republic Act No. 10601
C. Republic Act No. 8550
D. Republic Act No. 3601

78. It empowers the small hold farmers in their economic endeavor. It primarily aims in
realizing equitable distribution of benefits and opportunities through the empowerment of
small farmers.
A. Agricultural Tenancy Act of the Philippines
B. Magna Carta for Small Farmers
C. Comprehensive Agrarian Reform Law of 1988
D. Agri-Agra Reform Act of 2009

79. National Irrigation Administration (NIA), a government-owned and controlled corporation

responsible for irrigation development and management was created under this policy.
A. Republic Act No. 10969
B. Republic Act No. 3601
C. Republic Act No. 7900
D. Republic Act No. 8550

80. Through Executive Order 165, the following government agencies were transferred from
Department of Agriculture to Office of the President except.
A. Fertilizer and Pesticide Authority
B. National Irrigation Administration
C. National Seed Industry Council
D. Philippine Coconut Authority

81. This is an act creating the Cooperative Development Authority to promote the viability
and growth of cooperatives as instrument of equity, social justice and economic
development.
A. Republic Act No. 9520
B. Republic Act No. 6938
C. Republic Act No. 821
D. Republic Act No. 10848

82. This law amends the creation and growth of cooperatives as a practical vehicle for
promoting self-reliance and harnessing people power towards the attainment of economic
development and social justice.
A. Republic Act No. 821
B. Republic Act No. 10848
C. Republic Act No. 9520
D. Republic Act No. 6938

29
83. This law is an act liberalizing the importation, exportation, and trading of rice, lifting for
the purpose the quantitative import restriction on rice and for other purpose.
A. Republic Act No. 11203
B. Republic Act No. 1937
C. Republic Act No. 10848
D. Republic Act No. 9520

84. This policy was created to provide agriculture, fisheries and agrarian reform credit,
insurance and financing system to improve the productivity of the agriculture and fisheries
sectors.
A. Land Reform Act of 1955
B. Agri-Agra Reform Act of 2009
C. Agricultural Tenancy Act of the Philippines
D. Magna Carta for Small Farmers

85. Under this policy, landless farmers and farmworkers will receive the highest consideration
to promote social justice and to move the nation toward sound rural development and
industrialization, and the establishment of owner cultivatorship of economic-size farms as the
basis of Philippine agriculture.
A. Comprehensive Agrarian Reform Law of 1988
B. Agricultural Tenancy Act of the Philippines
C. Agri-Agra Reform Act of 2009
D. Land Reform Act of 1955

86. The following are policies under agrarian reforms except.

A. Republic Act No. 6657
B. Republic Act No. 7607
C. Republic Act No.1199
D. Republic Act No. 8550

87. This policy was declared to achieve food security as the overriding consideration in the
utilization, management, development, conservation and protection of fishery resources in
order to provide the food needs of the population.
A. Republic Act No. 8550
B. Republic Act No. 10601
C. Republic Act No.1199
D. Republic Act No.8435

88. The purpose of Fertilizer and Pesticide Authority (FPA) is to assure the agricultural sector
of adequate supplies of fertilizer and pesticide at reasonable prices, rationalizing the
manufacture and marketing of fertilizer, protecting the public from the risks inherent in the
use of pesticides, and educating the agricultural sector in the use of these inputs. This was
created under which administration.
A. President Corazon Aquino
B. President Fidel Ramos
C. President Ferdinand Marcos
D. President Gloria Arroyo

30
89. This policy provides rule to prevent the unlawful sale and use of fertilizers, pesticides and
other agricultural chemicals.
A. Presidential Decree 1414
B. Presidential Decree 1114
C. Presidential Decree 1144
D. Presidential Decree 1411

90. This policy established quality standards for coconut and palm products and by-products,
develop and expand the domestic and foreign market. It also integrates and coordinates the
then diffuse efforts of the government of promoting the accelerated growth of the coconut
and other palm oil industry.
A. Republic Act No. 8048
B. Presidential Decree No. 232
C. Republic Act No. 10068
D. Presidential Decree No. 1433

91. This policy was created to address issues related to significant economic losses brought
about by plant pest, to provide regulatory procedures in preventing the introduction,
incursion and establishment and spread of plant pest.
A. Plant Quarantine Decree of 1978
B. Agriculture and Fisheries Modernization Act of 1997
C. High-Value Crops Development Act of 1995
D. Organic Agriculture Act of 2010

92. This act amended the Republic Act No. 6938 to encourage private sectors to undertake
the formation and organization of cooperatives and shall a conducive environment to the
growth and development of the cooperative.
A. Republic Act No. 9520
B. Republic Act No. 8048
C. Republic Act No. 821
D. Republic Act No. 10848

93. This policy promotes development and adoption of modern, appropriate and
environmentally-safe agricultural and fisheries machinery and equipment to enhance farm
productivity and efficiency in order to achieve food security and safety and increase farmers’
income.
A. Republic Act No. 8550
B. Republic Act No. 10969
C. Republic Act No.8435
D. Republic Act No. 10601

31
94. This policy was created to promote the production, processing, marketing and distribution
of high value crops. Its goal is to increase production, income and livelihood opportunities
among small producers and access to affordable, safe and healthy food.
A. Republic Act No. 10068
B. Republic Act No.8435
C. Republic Act No. 10601
D. Republic Act No. 7900

95. This is an act providing the development and promotion of organic agriculture in the
Philippines. It aims to contribute to a better farm incomes and sustainable livelihood by
increasing farm productivity, protect health of farmers, consumers and the public.
A. Republic Act No. 10601
B. Republic Act No.8435
C. Republic Act No. 10608
D. Republic Act No. 7900

INTERNATIONAL ECONOMICS9
96. The nation with the lowest cost of production has:
A. a comparative advantage
B. an absolute advantage
C. an unfair advantage
D. a competitive advantage

97. The nation with the lowest opportunity costs of producing a good has:
A. a comparative advantage
B. an absolute advantage
C. an unfair advantage
D. a competitive advantage

98. Trade will most likely take place between two nations that:
A. are very different
B. are much the same
C. are in close proximity to each other
D. have similar access to resources

99. The laissez-faire philosophy held that

A. strict government control of all economic activity was necessary.
B. little or no government control of the economy was needed.
C. nations need the government to establish export laws to stimulate the economy.
D. none of the above.

9
Dr. Rogelio D. Cosio and Annar L. Gonzales (PSAU)

32
100. Which of the following would NOT be a good reason for a firm expanding trade into
foreign countries?
A. Higher profits
B. Diversification
C. Market saturation
D. Diseconomies of scale

101. According to comparative advantage, a nation should

A. not import any goods if the nation does not have a relative disadvantage.
B. specialize in production of the good for which it has the least relative
disadvantage.
C. import only the goods in which the nation has a disadvantage.
D. not produce any goods if the nation is at a relative disadvantage.

102 Opportunity cost theory states that a nation has

A. an absolute advantage in the production of the good with the lowest opportunity
cost.
B. no advantage in the production of any good with an opportunity cost.
C. a comparative advantage in the production of the good with the lowest
D. opportunity cost.
E. none of the above.

103. Some of the net welfare effects of a tariff imposed by a small nation are
A. to reduce consumer welfare, increase producer welfare, and raise government
revenue.
B. to increase consumer welfare, decrease producer welfare, and raise government
revenue.
C. to increase consumer and producer welfare, and raise government revenue.
D. none of the above.

104. A quota represents

A. a quantitative restriction on the amount of a good imported.
B. a combination of ad valorem and specific duties.
C. a compromise between taxpayers and consumers.
D. none of the above.

105. The World Trade Organization

A. is a multilateral agreement establishing the rules for governing international trade.
B. serves as an institutional forum for negotiating reductions to trade barriers and
trade disputes.
C. has the main objective of encouraging economic growth and development by
liberalizing world trade.
D. all of the above

33
106. Which of the following is a specialized agency that is designed to encourage economic
growth and development by liberalizing international trade?
A. UNICEF
B. UNCTAD
C. WTO
D. UNDP

107. The agreement that represented the first serious attempt to liberalize agricultural trade
is referred to as
A. The Uruguay Round Agreement.
B. The WTO Round.
C. The Doha Development Agenda.
D. None of the above.

108. If for example, the US loses in the Geneva-based World Trade Organization (WTO)
tribunals whose rulings are final, it has to
A. change US laws
B. pay fines to other nations
C. suffer WTO trade sanctions and lose their trade rights
D. choose any of the above

109. Which of the following is not true about the World Trade Organization (WTO):
A. The WTO has the power to set, administer and enforce the global rules of trade
for its member-countries.
B. The WTO will be organized much like the General Assembly of the United Nations
(UN) with a Security Council, where the major nations have veto power.
C. WTO decisions will be made by the votes of its member-countries which include
making and regulating the rules of global trade.
D. The WTO has global tribunals for trade disputes composed of judges sitting as
trade officials from other nations or outside parties appointed by the WTO
leadership.

110. Republic Act (RA) 8178, also known as the “Agricultural Tariffication Act” exempted
rice from trade liberalization in view of the staple grain’s
A. economic significance
B. political significance
C. social significance
D. all of the above

111. Under the WTO-GATT-Uruguay Round agreement on agriculture, the de minimis level of
aggregate measure of support (AMS) for any sector in developing countries is ___ of the total
value of production.
A. 5%
B. 10%
C. 15%
D. 20%

34
112. _____________ remained as the Philippines’ number 1 agricultural export commodity
even after the GATT-WTO-AoA implementation based on the free on board (FOB) value.
A. Coconut oil
B. Banana
C. Pineapple
D. Tuna

113. Which of the following benefit the economists in 1994 predicted from the
implementation of the Philippines’ GATT-WTO-AoA:
A. Expansion of export markets for the Philippines as a result of trade liberalization.
B. Greater consumer welfare as consumer prices were expected to go down due to
increased competition.
C. Increased employment and livelihood opportunities in the rural sector.
D. All of the above.

114. Economists argued that the __________ would facilitate the entry of Philippine
agricultural commodities into the international market.
A. reduction of tariffs
B. removal of imports restrictions and other forms of nontariff barriers
C. harmonization of sanitary and phytosanitary measures
D. all of the above

115. Which is systematic record of all the economic transactions between one country and
rest of the world?
A. Balance of trade
B. Balance of transactions
C. Budget
D. Balance of payments

116. Which of the following is NOT part of the balance of payments?

A. The current account
B. The financial account
C. The capital account
D. The treasury account

117. How might a government attempt to reduce a medium term balance of payments
deficit?
A. By reducing foreign exchange holdings
B. By restructuring the macro economy
C. By seeking a loan from the IMF
D. By allowing overseas business to takeover certain sectors of the economy

35
118. Which of the following would be an appropriate policy to reduce a balance of payments
deficit?
A. An increase in government spending
B. A cut in the level of indirect taxes
C. An increase in interest rates
D. A decrease in interest rates

119. As the Philippine peso depreciates in value, the price of goods in foreign currency
declines, resulting in
A. the decline in demand for Philippine goods.
B. the decline of prices.
C. loss of market share.
D. all of the above.

120. Suppose that the Philippines devalues the peso. If both exports and imports are written
in terms of pesos, then the Philippine balance of trade
A. worsens.
B. improves.
C. is unaffected.
D. falls for a while before increasing.

121. If BOT (Balance of Trade) is showing the deficit of P2 billion and value of exports is
P7 billion, then the value of imports will be:
A. P2 billion
B. P5 billion
C. P7 billion
D. P9 billion

122. Balance of trade (BOT) is measured as:

A. difference between import and export of goods
B. difference between import and export of services
C. difference between import and export of capital
D. difference between all imports and all exports

123. Balance of trade (BOT) is (-) P150 billion and value of exports are P350 billion. In this
case, the value of imports will be
A. P200 billion
B. P300 billion
C. P400 billion
D. P500 billion

124. Which one of the following items are not the transactions of balance of trade
A. export of jute
B. import of steel
C. banking services provided in other countries
D. import of food items

36
125. If the Philippines export goods worth P200 billion and imports goods worth P300 billion.
it will have a
A. surplus of P100 billion in balance of trade
B. deficit of P100 billion in balance of trade
C. deficit of P500 billion in balance of trade
D. none of the above

126. Reserves in the banking system will increase if the Bangko Sentral ng Pilipinas
A. Buys euros or sells dollars
B. Sells euros or buys dollars
C. Buys both euros and dollars at the same time
D. Sells both euros and dollars at the same time

127. Suppose that you purchase a Philippine government bond and the number of pesos
needed to purchase one dollar increases. Your return on the bond
A. Decreases by the amount of the dollar's appreciation
B. Decreases by more than the amount of the dollar's appreciation
C. Decreases by less than the amount of the dollar's appreciation
D. Increases by the amount of the dollar's appreciation

128. The impact on the foreign exchange market for dollars resulting from the Fed purchasing
euros will be:
A. A decrease in the demand for dollars
B. An increase in the demand for dollars
C. An increase in the supply of dollars
D. A decrease in the demand for dollars and an increase in the supply of dollars

PACKAGING AND LABELING10

129. It is the range of activities associated with the designing and manufacturing of an
appropriate package.
A. Branding
B. Labeling
C. Marketing
D. Packaging

130. ______ is a level of packaging which is in direct contact with the product, carries and
remains with the product until is consumed.
A. Ordinary
B. Primary
C. Secondary
D. Tertiary

10
Rodel L. Oclaret (ASSCAT) and Liza May M. Lamban (USeP)

37
131. _____ is used to provide all the relevant information about the product to the customer.
A. Branding
B. Labeling
C. Marketing
D. Packaging

132. ______ is a level of packaging that is commonly used when the goods are transported
from one location to another.
A. Ordinary
B. Primary
C. Secondary
D. Tertiary

133. The following are purposes of packaging, except ______.

A. Containment
B. Information transmission
C. Protection
D. Tamper-evident and secure

134. ________ is a factor in choosing packaging materials that entrepreneurs tend to skip this
process and end up with poor quality packaging materials.
A. comes with quality customer service
B. cost-effective and convenient
C. durable and high quality
D. environment-friendly and legally compliant

135. ______ is a type of packaging material widely used for products such as sodas, beers,
canned goods and animal foods.
A. Aluminum
B. Cardboard
C. Glass
D. Plastic

136. ______ is a type of packaging material extensively used for apples, potatoes and other
fruits that has been (almost) totally replaced by other types of containers.
A. Aluminum
B. Cardboard
C. Glass
D. Wooden Crates

137. ______ is a type of packaging material which is mainly resin that can be created to be
rigid or flexible depending on what is going to be placed inside the package.
A. Aluminum
B. Cardboard
C. Glass
D. Plastic

38
138. This type of label shows the grade of the product. It shows the quality of products by
words, letters, or figures.
A. Brand label
B. Descriptive label
C. Grade label
D. Informative label

139. This type of label gives information about method and security of the product.
A. Brand label
B. Descriptive label
C. Grade label
D. Informative label

140. The following are the importance of labeling, except _______.

A. describes
B. grades
C. identifies
D. quality service

141. ____ is a kind of packaging that is wrapped in multiple layers of materials, either
unnecessary or unwanted by the consumer.
A. Over-packaging
B. Primary
C. Secondary
D. Tertiary

142. A guide to efficient packaging that is a popular option for businesses and retroactively
re-design their products and cut costs.
A. Gather data for future savings
B. Label Printing
C. Reduce last minute decisions
D. Smaller-Greener Packaging

143. A popular idiom that applies to packaging in a very real way.

A. “across the board”
B. “banking on”
C. “birds of a feather”
D. “measure twice, cut once”

39
MARKETING COSTS AND MARGINS11

144. _____ is the cost involved in bringing the product from the farm gate to the final
consumers.
A. fixed costs
B. variable costs
C. added costs
D. marketing costs

145. The costs in marketing agricultural products are greatly affected by the following:
A. perishability
B. packaging
C. need for storage
D. all of the above

146. Another term for marketing charges is ______.

A. costs
B. profit
C. marketing bill
D. interest

147. The selling price less buying price divided by the buying price is called _____.
A. mark-up
B. percentage margin
C. absolute margin
D. profit

148. ______ is an improvement of the buying and selling, so that the sellers can get the true
worth of their products and the consumers receive the right value of their money.
A. right price
B. price manipulation
C. pricing efficiency
D. all of the above

149. More output per unit input is called ______.

A. marginal value product
B. scale factor efficiency
C. marketing efficiency
D. load factor efficiency

150. Another name for marketing margin is _______.

A. profit
B. bill
C. net return
D. price spread

11
Maria Hazel I. Bellezas (VSU)

40
151. Compute for the percent farmer’s share given the following:
Retail price P20.00
Marketing margin P12.00
Farmer’s return P 8.00
A. 40%
B. 67%
C. 8%
D. 60%

152. What is the percentage margin given the following:

Selling price P20.00
Purchase price P12.00
A. 40%
B. 67%
C. 8%
D. 20%

153. The difference between the price that the consumers pay for the final product and the
price received by producers for the raw product is called ______.
A. marketing margin
B. price margin
C. profit
D. marketing cost

PRICE AND OUTPUT DETERMINATION12

154. The following are the characteristics of perfect competition, except ______.
A. many buyers and sellers in the market
B. products are identical
C. buyers and sellers do not have the same amount of information about the product
D. buyers and sellers are free anytime to enter or leave the market

155. The following are examples of commodity, except _____.

A. rice
B. bread
C. sugar
D. fruits

156. A firm with high production cost is ______.

A. likely more competitive
B. likely less competitive
C. likely perfectly competitive
D. less likely perfectly competitive

12
Brigette Catalan (USeP)

41
157. Which of the following markets can a buyer or seller freely enter or exit?
A. commodity market
B. industrial market
C. capital market
D. real estate market

158. The price per kilo of tomatoes in a local market is set at Php20. If one of the vendors will
sell at a higher price, which of the following statements is TRUE?
A. other vendors s will also increase their selling prices
B. other vendors will reduce their tomato supply for sale
C. buyers will not buy from that vendor
D. buyers will find substitute good for tomato

159. If the marginal revenue per unit of sold leather wallet exceeds the marginal cost of
production, profit can be increased by _________.
A. increasing production
B. reducing cost of production
C. reducing the number of finished goods for sale
D. increasing the price per unit of of the leather wallet

160. Due to the unavailable supply of timber for plywood production for a short period of
time, plywood production ___________.
A. can be increased.
B. must be reduced.
C. must continue.
D. can be stopped temporarily.

161. If the revenue per bottle of a goat’s milk is lower than the variable cost of production,
the farm will consider ________.
A. reducing production
B. shutting down
C. having price increase
D. cow’s milk

162. If the price per box of butter is lower than the average cost of production, then they
must ________.
A. freeze butter supply in the market
B. stop production in the long run; re-open in the future if price exceeds average cost
of production
C. continue production in the short run; shutdown in the future if price exceeds
average cost of production
D. shift to leather production

42
163. If there is an increase in the demand for organic vegetables in the market, then organic
farms __________.
A. cannot readily supply in the short run; it can significantly increase production in
the long run
B. can readily supply in the short run; it can shorten production in the long run
C. cannot readily supply in the long run; can significantly increase production in the
short run
D. can shift to other agricultural products

164. The price set by a monopoly is _____________.

A. equal to marginal cost
B. a status of quality products
C. higher than marginal cost
D. lower than marginal cost

165. The government requires the following to monitor the monopolist in a market:
A. tax dues
B. business license
C. patent and copy right/intellectual property right
D. brand name

166. Which of the following can be a monopolist’s product/service in a local community?

A. telecommunication
B. water
C. farm school
D. ornamental plants

167. If the same good is sold at different prices to different buyers; this is called ________.
A. price manipulation
B. price differentiation
C. price discrimination
D. price variation

168. In an oligopoly, there are a few players offering _______.

A. identical products
B. standardized products
C. specialized products
D. differentiated products

169. An oligopoly with only 2 players is termed as ______.

A. biopoly
B. duopoly
C. monopoly
D. cartel

43
170. Oligopolists form a cartel and act like monopolist. Their decision becomes _______.
A. individualistic
B. collusive
C. competitive
D. the same

ANSWER KEY:
1) E 44) A 87) A 130) B
2) C 45) A 88) C 131) B
3) C 46) A 89) C 132) D
4) E 47) D 90) B 133) D
5) E 48) D 91) A 134) C
6) E 49) B 92) A 135) A
7) B 50) B 93) D 136) D
8) D 51) A 94) D 137) D
9) B 52) C 95) C 138) C
10) B 53) A 96) B 139) D
11) B 54) D 97) A 140) D
12) C 55) D 98) A 141) A
13) C 56) B 99) B 142) B
14) C 57) A 100) D 143) D
15) A 58) A 101) C 144) D
16) C 59) C 102) C 145) D
17) B 60) C 103) A 146) C
18) A 61) D 104) A 147) A
19) A 62) C 105) D 148) C
20) D 63) A 106) C 149) C
21) B 64) B 107) A 150) D
22) B 65) A 108) D 151) A
23) A 66) A 109) B 152) A
24) A 67) B 110) D 153) A
25) D 68) C 111) B 154) C
26) A 69) B 112) A 155) B
27) D 70) B 113) D 156) D
28) D 71) B 114) D 157) A
29) B 72) B 115) D 158) C
30) D 73) D 116) D 159) A
31) A 74) B 117) C 160) D
32) D 75) D 118) C 161) B
33) D 76) D 119) D 162) B
34) B 77) A 120) B 163) C
35) D 78) B 121) D 164) C
36) D 79) B 122) D 165) C
37) A 80) C 123) D 166) B
38) D 81) B 124) C 167) C
39) A 82) C 125) B 168) A
40) A 83) A 126) C 169) B
41) A 84) B 127) A 170) B
42) B 85) A 128) A
43) A 86) D 129) D

44