9.

Equilibrium in a market occurs when:

A. Supply is zero
B. Demand is greater than supply
C. Supply equals demand
D. There are price ceilings
Republic of the Philippines Answer: C
ISABELA STATE UNIVERSITY 10. A surplus in a market happens when:
Palanan Extension Unit A. Demand equals supply
B. Price is below equilibrium
Agricultural Economics and Marketing C. Quantity supplied is greater than quantity
Midterm Examination demanded
BACHELOR OF SCIENCE IN AGRICULTURE D. Price is fixed
Answer: C
Name: __________________________________ 11. Which is an example of a price ceiling?
A. Minimum wage
Year:____________________________________ B. Maximum rent
C. Tariff
Date:___________________________________ D. Income tax
Answer: B
Score:___________________________________ 12. When price is below equilibrium, there is:
A. A surplus
GOLDEN RULE B. A shortage
“THOU SHALL NOT CHEAT” C. Price stability
“ERASURES MEANS WRONG” D. Market clearing
“TAMPERING MEANS WRONG” Answer: B
“WRONG SPELLING WRONG” 13. A decrease in consumer income affects:
A. Normal goods positively
B. Inferior goods negatively
I. Multiple Choice C. Normal goods negatively
Choose the letter of the correct answer. Write your D. Quantity supplied
answer on the space provided before each number. Answer: C
14. The opportunity cost of a decision is:
A. The money spent
1. What does microeconomics primarily study? B. The benefit of the next best alternative foregone
A. National income C. The sum of all expenses
B. Government policies D. The utility gained
C. Individual decision-making units Answer: B
D. Inflation 15. Elasticity of demand measures:
Answer: C A. Producer output
2. Which of the following is a microeconomic issue? B. How much quantity demanded changes with
A. Unemployment rate price
B. Price of corn in a local market C. Tax impact
C. National budget D. Consumer income
D. Gross Domestic Product Answer: B
Answer: B 16. Inelastic demand means:
3. In microeconomics, demand refers to: A. Large change in quantity for small price change
A. The desire to consume B. No change in quantity despite price change
B. The willingness and ability to purchase a good C. Demand decreases over time
C. Government spending D. Perfect competition
D. Market failure Answer: B
Answer: B 17. If the cross-price elasticity between two goods is
4. The law of demand states that: positive, they are:
A. As price increases, demand increases A. Complements
B. As price increases, demand decreases B. Substitutes
C. As price decreases, supply increases C. Unrelated
D. As demand increases, price decreases D. Inferior goods
Answer: B Answer: B
5. A change in quantity demanded is caused by: 18. Marginal utility refers to:
A. Income change A. The total satisfaction
B. Change in consumer taste B. The additional satisfaction from consuming one
C. Price change more unit
D. Number of sellers C. Net benefit
Answer: C D. Cost of production
6. Which factor shifts the demand curve? Answer: B
A. A change in the price of the good 19. The law of diminishing marginal utility states that:
B. A change in consumer income A. Total utility increases endlessly
C. A change in the quantity demanded B. Additional units bring more satisfaction
D. A change in supply C. Additional units bring less added satisfaction
Answer: B D. Price always reflects utility
7. Supply refers to: Answer: C
A. The total quantity of goods consumers want 20. Production possibility frontier shows:
B. The total goods produced nationally A. Only production
C. The amount of goods producers are willing and B. Combinations of goods produced with limited
able to sell resources
D. Imports minus exports C. Demand and supply
Answer: C D. Price levels
8. The law of supply states that: Answer: B
A. As price decreases, supply increases 21. Which market structure has many sellers of
B. As price increases, supply increases identical products?
C. As demand increases, supply decreases A. Monopoly
D. Supply remains constant regardless of price B. Monopolistic competition
Answer: B C. Oligopoly
 D. Perfect competition D. Stable prices
Answer: D Answer: B
22. A monopolist is a: 35. Fiscal policy involves:
A. Price taker A. Interest rate control
B. Price maker B. Government spending and taxation
C. Competitive seller C. Money supply control
D. Consumer D. Banking regulation
Answer: B Answer: B
23. In the short run, firms in perfect competition can 36. Monetary policy is conducted by:
earn: A. The legislature
A. Negative profits only B. The treasury
B. Zero profits only C. The central bank
C. Positive, zero, or negative profits D. Tax authorities
D. Supernormal profits only Answer: C
Answer: C 37. The main tool of monetary policy is:
24. Marginal cost is the: A. Taxation
A. Total cost divided by quantity B. Government spending
B. Cost of producing one more unit C. Interest rates
C. Variable cost minus fixed cost D. Budget surplus
D. Cost of labor Answer: C
Answer: B 38. Aggregate demand consists of:
25. Which cost does not change with output? A. Consumption only
A. Variable cost B. Consumption and investment only
B. Marginal cost C. C + I + G + (X-M)
C. Fixed cost D. Money supply
D. Total cost Answer: C
Answer: C 39. An increase in aggregate demand causes:
A. Recession
26. Macroeconomics deals with: B. Higher unemployment
A. Households C. Economic growth
B. Firms D. Lower GDP
C. The whole economy Answer: C
D. Prices of individual products 40. A budget deficit occurs when:
Answer: C A. Revenue > Spending
27. Which of the following is a macroeconomic goal? B. Revenue = Spending
A. Firm profitability C. Revenue < Spending
B. Consumer satisfaction D. GDP falls
C. Full employment Answer: C
D. Revenue maximization 41. The multiplier effect relates to:
Answer: C A. Price controls
28. Gross Domestic Product (GDP) measures: B. Interest rates
A. Total exports C. Initial spending causing more income and output
B. Total goods produced abroad D. Government borrowing
C. Total output in a country Answer: C
D. National debt 42. The business cycle includes all except:
Answer: C A. Expansion
29. Which of the following is included in GDP? B. Peak
A. Illegal transactions C. Government budget
B. Housework D. Recession
C. Sale of used goods Answer: C
D. Production of new goods 43. A currency depreciation makes exports:
Answer: D A. More expensive
30. Inflation is defined as: B. Less competitive
A. Increase in wages C. Cheaper
B. Sustained increase in price level D. Impossible
C. Decrease in unemployment Answer: C
D. Growth in GDP 44. Trade surplus occurs when:
Answer: B A. Imports exceed exports
31. A negative inflation rate is known as: B. Exports exceed imports
A. Hyperinflation C. GDP is negative
B. Disinflation D. Inflation is high
C. Deflation Answer: B
D. Recession 45. GDP per capita is:
Answer: C A. GDP divided by number of firms
32. The unemployment rate measures: B. GDP divided by population
A. All jobless people C. Income tax divided by GDP
B. Jobless people actively seeking work D. GNP plus exports
C. Retired workers Answer: B
D. All adults not working 46. Which of the following is not a component of GDP?
Answer: B A. Consumption
33. Which is not a type of unemployment? B. Investment
A. Frictional C. Transfers
B. Structural D. Government spending
C. Demand-pull Answer: C
D. Cyclical 47. An open economy allows:
Answer: C A. No trade
34. A recession is characterized by: B. Only exports
A. Increasing output C. International trade
B. Falling GDP D. Full government control
C. Decreasing inflation Answer: C
48. Which indicator is used to measure price level
changes?
 A. GDP 68. The cost of the next best alternative foregone.
B. CPI Answer: Opportunity Cost
C. GNP 69. A sustained rise in the general price level.
D. Interest rate Answer: Inflation
Answer: B 70. The percentage of the labor force that is jobless
49. The Phillips Curve shows the relationship between: and seeking work.
A. GDP and inflation Answer: Unemployment Rate
B. Interest and investment 71. A tax on imported goods.
C. Unemployment and inflation Answer: Tariff
D. Imports and exports 72. Central institution responsible for a nation’s
Answer: C monetary policy.
50. Stagflation means: Answer: Central Bank
A. Low inflation and low unemployment 73. A curve showing combinations of two goods that
B. High inflation and high unemployment can be produced with limited resources.
C. High GDP growth Answer: PPF (Production Possibility Frontier)
D. Trade deficit 74. A good for which demand increases as consumer
Answer: B income rises.
Answer: Normal Good
II. True or False 75. The additional output from using one more unit of
Write TRUE if the statement is correct and FALSE if input.
it’s wrong. Answer: Marginal Product

51. Microeconomics focuses on the economy as a

whole, including national income and output.
Answer: False
52. A change in the price of a good leads to a
movement along the demand curve, not a shift of
the curve.
Answer: True
53. The law of supply states that as the price of a good
decreases, producers are willing to supply more of
it.
Answer: False
54. Perfect competition is a market structure where
there are many sellers offering identical products.
Answer: True
55. Gross Domestic Product (GDP) includes the value of
intermediate goods to avoid double counting.
Answer: False
56. Inflation is a sustained decrease in the general
price level of goods and services in an economy.
Answer: False
57. Fiscal policy involves decisions about government
spending and taxation to influence the economy.
Answer: True
58. The unemployment rate includes people who are
not actively looking for work.
Answer: False
59. An increase in aggregate demand generally leads
to an increase in output and employment.
Answer: True
60. The business cycle includes phases such as
expansion, peak, contraction, and trough.
Answer: True

III. Identification
Identify what is being described in each item. Write
your answer in the space provided.

61. The study of how individuals and firms make

decisions in a market.
Answer: Microeconomics
62. The total market value of all final goods and
services produced in a country in a year.
Answer: GDP
63. A market structure with a single seller and no close
substitutes.
Answer: Monopoly
64. The responsiveness of quantity demanded to a
change in price.
Answer: Elasticity
65. Government policy involving spending and
taxation.
Answer: Fiscal Policy
66. The price at which quantity supplied equals
quantity demanded.
Answer: Equilibrium
67. A decrease in the general price level of goods and
services.
Answer: Deflation