Microeconomics Final Examination (Set B)

1. Goods or services a consumer must pay to obtain; also called scarce goods
Economic goods
Free goods
Productive resources
Zero cost resources

2. The inputs used in the production of goods and services to make a profit: land, economic
capital, labor, and entrepreneurship; also called “factors of production”
Economic goods
Free goods
Productive resources
Zero cost resources

3. The value of the next best alternative

Opportunity cost
Real cost
Economic cost
Marginal cost

4. The way in which the work required to produce a good or service is divided into tasks
performed by different workers
Division of labor
Economies of scale
Specialization
Assembly line

5. When the average cost of producing each individual unit declines as total output
increases

The long-run average cost of producing output decreases as total output increases
Division of labor
Economies of scale
Specialization
Assembly line

6. The branch of economics that focuses on actions of particular agents within the economy,
like households, workers, and businesses
Fiscal policy
 Monetary policy
Macroeconomics
Microeconomics

7. Policy that involves altering the level of interest rates, the availability of credit in the
economy, and the extent of borrowing
Fiscal policy
Monetary policy
Macroeconomics
Microeconomics

8. A market in which firms are sellers of what they produce and households are buyers
Circular flow diagram
Goods and services market
Dollar market
Labor market

9. The market in which households sell their labor as workers to businesses or other
employers
Circular flow diagram
Goods and services market
Economic model
Labor market

10. A quantity that can assume a range of values

Variable
Function
Equation
Mathematical equation

11. Indicates that two variables are positively related; when one variable increases, so does
the other, and when one variable decreases, the other also decreases
Negative slope
Positive slope
Slope
Slope of zero

12. The change in the vertical axis divided by the change in the horizontal axis
Negative slope
 Positive slope
Slope
Slope of zero

13. Shows a relationship between two variables: one measured on the horizontal axis and the
other measured on the vertical axis
Bar graph
Line graph
Pie graph
Time series

14. Type of line graph in which the horizontal axis shows time and the vertical axis displays
another variable. Thus, a time-series graph shows how a variable changes over time.
Bar graph
Line graph
Pie graph
Time series

Choice in a World of Scarcity

15. Measures cost by what is given up in exchange; opportunity cost measures the value of
the foregone alternative
Budget constraint
Opportunity cost
Sunk cost
Production possibilities frontier

16. Costs that are made in the past and cannot be recovered
Budget constraint
Opportunity cost
Sunk cost
Law of diminishing returns

17. A diagram that shows the productively efficient combinations of two products that an
economy can produce given the resources it has available
Law of diminishing returns
Production possibilities frontier (or curve)
Opportunity cost
Budget constrain
 18. When benefits of trade are maximized and when the mix of goods being produced
represents the mix that society most desires
Allocative efficiency
Productive efficiency
Diminishing returns
Trade-offs

19. Also called the theory of rational behavior, it is the assumption that people will make
choices in their own self-interest
Assumption of rationality
Irrational choice theory
Random choice theory
Altruism (unselfish concern for other people)

20. Examination of decisions on the margin, meaning comparing costs of a little more or a
little less
Marginal analysis
Marginal benefit
Marginal cost
Ceteris Paribus

21. The difference (or change) in cost of a different choice

Marginal benefit
Marginal cost
Marginal analysis
Ceteris paribus

22. Conclusions based on logic and evidence that can be tested

Normative statement
Positive statement
Rigid and prescriptive statement
Political statement

Supply and Demand

23. One in which there is a large number of buyers and sellers, so that no one can control the
market price
Command economy
Competitive market
Free market
Market economy

24. An economy where economic decisions are decentralized, resources are owned by private
individuals, and businesses supply goods and services based on demand.
Command economy
Socialist economy
Free market
Market economy

25. When changing one variable in a function (e.g. demand for some product), we assume
everything else held constant
Ceteris paribus
Demand
Supply
Demand curve

26. A graphic representation of the relationship between price and quantity demanded of a
certain good or service, with price on the vertical axis and quantity on the horizontal axis
Demand
Supply
Demand curve
Supply curve

27. The common relationship that a higher price leads to a lower quantity demanded of a
certain good or service and a lower price leads to a higher quantity demanded, while all
other variables are held constant
Law of Demand
Quantity demanded
Demand curve
Demand schedule

28. What a buyer pays for a unit of the specific good or service
Price
Wage
Labor
Salary
29. Goods or services that can be used in place of one another
Complements
Substitutes
Inferior goods
Normal goods

30. Good or service whose demand increases when a consumer’s income increases and
demand decreases when income decreases
Complements
Substitutes
Inferior goods
Normal goods

31. The total number of units of a good or service producers are willing to supply/sell at a
given price
Law of supply
Quantity supplied
Supply curve
Supply schedule

32. The relationship between the price of a certain good or service and the quantity of that
good or service producers are willing to offer for sale
Supply
Quantity supplied
Supply curve
Supply schedule

33. A table that shows the quantity demanded for a certain good or service at a range of
prices
Law of supply
Quantity supplied
Supply curve
Supply schedule

34. A government payment to firms to encourage production of some good or service

Subsidy
Procurement
Allotment
Grant
35. Price and quantity combination where supply equals demand
Efficiency
Equilibrium
Surplus
Shortage

36. The quantity both supplied and demanded at the equilibrium price
Efficiency
Equilibrium price
Equilibrium quantity
Equilibrium

37. Situation where the quantity demanded in a market is less than the quantity supplied;
occurs at prices below the equilibrium; excess supply
Efficiency
Equilibrium
Surplus
Shortage

38. When a price ceiling is set below the equilibrium price, resulting in a shortage
Binding price ceiling
Price ceiling
Price floor
Price controls

39. A legal maximum price for a product

Price ceiling
Price floor
Price control
French price

40. As we consume more of a good or service, the utility we get from additional units of the
good or service tend to become smaller than what we received from earlier units
Law of diminishing marginal utility
Marginal analysis
Total utility
Cardinal utility

41. The loss of economic value (i.e. in social surplus) that occurs when a market produces an
inefficient quantity; a.k.a. excess burden
Deadweight loss
 Producer surplus
Economic efficiency
Allocative efficiency

42. The value to producers of their sales above their cost of production
Deadweight loss
Producer surplus
Economic efficiency
Allocative efficiency

43. The sum of consumer and producer surplus at some quantity and price of output
Producer surplus
Social (or economic or total) surplus
Deadweight loss
Economic efficiency

44. Supply and demand for jobs

Labor market
Supply market
Public market
Stock exchange

Elasticity

45. An economics concepts that measures the responsiveness of one variable to changes in
another variable
Elastic demand
Elasticity
Inelastic demand
Price changes

46. When the calculated elasticity is equal to one indicating that a change in the price of the
good or service results in a proportional change in the quantity demanded or supplied
Unitary elasticity
Inelastic supply
Elastic supply
Perfectly (or infinitely) elastic

47. The percentage change in quantity of good A that is demanded as a result of a percentage
change in good B
 Cross-price elasticity of demand
Interest elasticity of savings
Wage elasticity of labor supply
Infinitely elastic

48. The price of an item multiplies by the number of units sold: TR = P x Qd

Total revenue
Debt
Expense
Cost

49. Distribution of the tax burden between buyers and sellers

Tax incidence
Tax burden
Rebate
Duty tax

Utility

50. The term economists use to describe the satisfaction or happiness a person gets from
consuming a good or service
Utility
Utils
Experience points
Utility worker

51. The combination of goods and services that will maximize an individual’s total utility
Consumer equilibrium
Marginal utility
Deficit
Market imbalance

52. A higher price means that, in effect, the buying power of income has been reduced, even
though actual income has not changes; always happens simultaneously with a substitution
effect
Income effect
Substitution effect
Budget constraint
 Breakeven

Production and cost

53. The process of combining inputs to produce outputs, ideally of a value greater than the
value of the inputs
Firm
Production
Factory worker
Market

54. Total revenues minus total costs (explicit plus implicit costs)
Accounting profit
Economic profit
Explicit costs
Implicit costs

55. Opportunity cost of resources already owned by the firm and used in businesses, for
example, expanding a factory onto land already owned.
Accounting profit
Economic profit
Explicit costs
Implicit costs

56. Alternative methods of combining inputs to produce output

Production technologies
Economies of scale
Constant returns to scale
Leviathan effect

57. Income from selling a firm’s product; defined as price times quantity sold
Rent
Wage or salary
Debt
Revenue

Perfect competition
 58. Market structure where each firm faces many competitors that sell identical products so
that no firm has any market power
market structure
perfect competition
price taker
profit-seeking firms

59. A situation in which one firm produces all of the output in a market.
Monopoly
Duopoly
Free market
Competitive market

Income distribution

60. The situation of being below a certain level of income one needs for a basic standard of
living
Poverty
Wealth
Income
Equality

61. Percentage of the population living below the poverty line

Poverty line
Poverty rate
Income inequality
Poverty

62. The group of government programs that provide assistance to the poor and the near-
poor
Safety net
Cash assistance
Income tax
Quintile

63. A tax system in which the rich pay a higher percentage of their income in taxes, rather
than a higher absolute amount
Progressive tax system
Effective income tax
Redistribution
 Regressive tax system

Globalization and trade

64. When a country can produce a good at a lower cost in terms of other goods; or, when a
country has a lower opportunity cost of production.
Absolute advantage
Comparative advantage
Competitive advantage
Mercantilism

65. A tax on imports, designed to protect domestic industry

Protectionism
Tariff
Import quotas
Globalization

Exchange rates and international trade

66. When a currency is worth less in terms of other currencies; also called “weakening”
Appreciating
Depreciating
Foreign exchange market
Dollarize
67. The process of buying a good and selling goods across borders to take advantage of
international price differences
Purchasing power parity (PPP)
Arbitrage
Foreign exchange market
Dollarize

68. If government statisticians collect, verify, and present economic statistics; economists
_____________________
Draw meaningful insights from data to inform stakeholders and policymakers
Provide policy and programs
Verify the data
Provide the needs and wants of people in the midst of scarcity

69. The most obvious use of the official statistics in government policymaking is reflected in
 Attachment of the Philippine Statistics Authority to the National Economic
Development Authority
Replacement of National Statistics Office and other statistics office into the
Philippine Statistics Authority
Monthly publishing of PSA of monthly statistical indicators
The scrutinizing of Cynthia Villar on the proposed budget of the Department of
Agriculture for research and statistics

70. The following are the most widely used official statistics in macroeconomics, EXCEPT
National income accounts
Price statistics
Labor market statistics
Family Income and Expenditure Survey (FIES)

71. The following are challenges that restrict economic communicators from accessing huge
array of government statistics, EXCEPT
Inadequate opportunities for training among data users
Non-user friendly datasets
Absence or inaccessibility of historical archival data
Difficulty of obtaining data due to Data Privacy Act
Maturity of online databases in PSA or BSP

72. Which among the following are economic data provided by the Bangko Sentral ng
Pilipinas
Interest rates
Public Sector Deficit/Surplus Data
Tax Revenue Data
Breakdown of National Budget

73. Which among the following are economic data provided by the Department of Finance
Interest rates
Public Sector Deficit/Surplus Data
Tax Revenue Data
Breakdown of National Budget

74. Which among the following are economic data provided by the Department of Budget
and Management
Interest rates
Public Sector Deficit/Surplus Data
Tax Revenue Data
Breakdown of National Budget
75. Which among the following are economic data provided by the Bureau of Treasury
Interest rates
Public Sector Deficit/Surplus Data
Tax Revenue Data
Breakdown of National Budget

76. If “unit record of data” refers to data of a single individual or organization; “aggregate-
level data” refers to _______________________
summed and/or categorized data (of group of individuals or organizations)
data of individual firms
collection of untreated data
graphs and tables

77. Which among the following are microeconomic data used to understand market forces?
Weekly prices on agricultural products
Labor Market Survey
Poverty Rate
Aggregate values on prices of rice

78. The following are measures taken by important multilateral organizations such as the
World Bank, International Monetary Fund, and World Trade Organization in providing
user-friendly datasets, EXCEPT
Provide accessible time-series statistics spread on excel files
Provide easy-to-use data portals
Generate graphs and tables that tailor-fit data users
Provide easy to understand data visualization

79. The following are recommendations to improve the access and appreciation of economic
data, EXCEPT
Training workshops on the use of official statistics
Provide accessible time-series statistics spread on excel files
Digitize old statistical records that is free to access online
Promptness and responsiveness on the Freedom of Information portal

80. A branch of economics that seeks to enrich the understanding of decision-making by

integrating the insights of psychology and by investigating how given currency amounts
can mean different things to individuals depending on the situation.
Behavioral economics
Fungible
Developmental economics
 Comparative economics

Essay

81 – 100. What are the benefits of using official statistics (government statistics) in
understanding economics? Explain why teaching economics should be empirical rather
than theoretical. (20 points)

BONUS QUESTION

1. A branch of economics that seeks to enrich the understanding of decision-making by

integrating the insights of psychology and by investigating how given currency amounts
can mean different things to individuals depending on the situation.
Behavioral economics
Fungible
Developmental economics
Comparative economics

2. When a firm gets so large that it operates inefficiently, experiencing diseconomies of

scale
Leviathan effect
Economies of scale
Diseconomies of scale
Constant returns to scale

3. Firms in a perfectly competitive market; since no firm has any market power they must
take the prevailing market price as given.
Price taker
market structure
perfect competition
profit-seeking firms

4. The level of output where price just equals average total cost, so profit is zero
Break-even point
Profit margin
Losses
Shutdown point
5. A branch of mathematics that economists use to analyze situations in which players
must make decisions and then receive payoffs based on what decisions the other players
make.
Game theory
Nash equilibrium
Prisoner’s dilemma
Kinked demand curve

6. Antipoverty programs set up so that government benefits decline substantially as people

earn more income – as a result, working provides little financial gain
Poverty trap
Near-poor
Poverty line
Poverty rate