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NAME_________________________________ SCORE: _____ /50 items

DIRECTION: Read the questions carefully and choose the best answer. Write the letter
before the number.

____ 1. The problem of scarcity _____.

A. arises only in poor countries. C. exists because the price of goods is too high.
B. exists because of limited resources. D. will eventually be solved by better planning.

____ 2. “If an individual is to maximize the utility received from the consumption, he or she should spend
all available income…” This statement assumes ________.
A. that saving is impossible. C. that the individual is not satiated in all goods.
B. that no goods are “inferior.” D. both A and B.

____3. An individual’s demand curve

A. represents the various quantities that the consumer is willing to purchase of a good at various price
B. is derived from an individual’s indifference curve map.
C. will shift if preferences, price of other goods, or income change.
D. all of the above.

____4. What is a firm?

A. A president, some vice presidents, and some employees
B. Any organization that wants to make a profit.
C. Any accumulation of productive assets.
D. Any organization that turns inputs into outputs

____5. If more and more labor is employed while keeping all other inputs constant, the marginal physical
productivity of labor _____.
A. will eventually increase. C. will eventually decrease.
B. will eventually remain constant. D. cannot tell from the information provided.

____6. In general, microeconomic theory assumes that the firms attempt to maximize the difference
between ______.
A. total revenue and accounting costs. C. price and marginal cost.
B. total revenues and economic costs. D. economic costs and average cost.

____7. In a competitive market, efficient allocation of resources is characterized by ________.

A. a price greater than the marginal cost of production.
B. the possibility of further mutually beneficial transactions.
C. the largest possible sum of consumer and producer surplus.
D. a value of consumer surplus equal to that of producer surplus.

____8. Price controls _______.

A. are always popular with consumers because they lower prices.
B. create shortages.
C. increase producer surplus because firms can now sell a good at a lower price.
D. are necessary to preserve equity.

____9. The excess burden of tax is ____.

A. The amount of which the price of a good increases
B. The loss of consumer and producer surplus that is not transferred elsewhere.
C. The amount which a person’s after-tax income decrease as a result of the new tax.
D. The welfare costs to firms forced to leave the market due to an inward shift of the demand curve.

____10. In the opening of the free trade, if world prices of a good are less than domestic prices of that
same good, _________.
A. domestic consumers will experience a loss of surplus.
B. domestic prices will drop to the world price level.
C. all domestic producers of that good will try to find another market because they can’t compete with
foreign producers.
D. domestic producers will increase the quantity supplied in order to crowd out the foreign produced

____11. It states that as the price of the commodities increase the amount of goods the consumer is
willing to purchase decrease and as the price of the commodities decrease the willingness of the
consumer to buy increases and, another factor remain constant.
A. Law of Diminishing Marginal Utility C. Law of Gravity
B. Law of Supply D. Law of Demand

____12. A deliberate attempt to recognize and transform existing agrarian system with the intention of
improving the distribution of agricultural incomes and thus fostering rural development.
A. Millennium Development Plan C. Water Reform
B. Land Reform D. Development Goals

____13. What is the process by which the productive capacity of the economy is increased over time to
bring about rising levels of national output and income?
A. Economic growth C. Economic development
B. Industry D. Employment

____14. A system whereby the determination of exchange rate is left solely to the market forces.
A. Foreign exchange liberalization C. Import liberalization
B. Terms of trade D. Foreign investment

____15. All are possible results when a high population growth rate continues in the Third World except
A. growth of slums
B. spread of diseases due to poverty and poor sanitation
C. increased Gross National Product
D. not enough schools, hospitals, roads, bridges, etc.

____16. The world of nations is suffering from recession and so nations are experiencing the following
EXCEPT ____________.
A. people are losing their jobs C. businesses are raking bigger profits
B. there is a drop in total spending D. production is slowing down

____17. When one company controls the supply of sugar, which term applies?
A. Monopoly C. Economic stability
B. Inflation D. Law of supply and demand

____18. Tomatoes are off season and so price of tomatoes is up. Which law/principle economics
explains it?
A. Substitution effect C. Principle of marginal utility
B. Law of cause and effect D. Law of supply and demand

____19. Which explains GNP?

A. The total value in pesos of goods and services produced during the year
B. The total value in pesos of goods produced during the year
C. The total value in pesos of services produced during the year
D. The total value in pesos of goods and services produced for 2 quarters

____20. Among the developing Asian nations, which of the following is widely promoted to be the better
solution to poverty and unemployment?
A. Privatization C. Industrialization
B. Urbanization D. Importation

____21. Stagflation occurs when the economy experiences __________________.

A. rising prices and rising output C. falling prices and falling output
B. rising prices and falling output D. falling prices and rising output

____22. Which among the following is an example of a transfer payment?

A. Profit C. Unemployment benefit
B. Rent D. Government purchases

____23. Which among the following best describes a recession?

A. A fall in real GNP over two consecutive time periods
B. An increased in real GNP from one period to the next
C. Nominal GNP declines from one period to the next
D. No change I real GNP from one period to the next

____24. Gross Domestic Product is the sum of the market value of the ______________________.
A. Intermediate goods C. manufacture goods
B. final goods and services D. inferior goods and services

____25. Which of the following statements is TRUE about a market economy?

A. With a large enough computer, central planners could give production more efficiently than markets.
B. Market participants act as if guided by an invisible hand to produce outcomes that maximize social
C. The strength of a market system is that it tends to distribute resources evenly across consumers.
D. Taxes help prices communicate costs and benefits to producers and consumers.

____26. In a free-market economy the allocation of resources is determined by _________.

A. votes taken by consumers C. Consumer preferences
B. central planning authority D. the level of profits of firms

____27. Trade-offs are required because wants are unlimited and resources are ___________.
A. economical C. scarce
B. unlimited D. marginal

____28. Raising taxes and increasing welfare payments ____________.

A. reduce market power
B. prove that there is such a thing as a free lunch
C. improve efficiency at the expense of equity
D. improve equity at the expense of efficiency

____29. The burden of a tax falls more heavily on the sellers in a market when ____________.
A. both supply and demand are elastic. C. demand is inelastic and supply is elastic
B. both supply and demand are inelastic D. demand is elastic and supply is inelastic

____30. Which of the following is the nature of power of taxation?

A. It is inherent in sovereignty. C. It is legislative in nature.
B. It is subject to constitutional and inherent limitations. D. All of the choices

____31. A kind of tax based on the rate of which decreases as the tax base or bracket increases.
A. Progressive B. Regressive C. Graduated D. Proportional

____32. Agrarian reform program, Philippine experience is a success.

A. The statement is generally true. C. The statement is doubtful.
B. The statement is untrue. D. There is no basis to conclude.

____33. It is also known as the Comprehensive Agrarian Reform Law (CARL)

A. Presidential Decree # 2 C. Presidential Decree # 27
B. Republic Act 6657 B. Republic Act 5766

____34. Statement no. 1: The Cooperatives Development Program of the government is designed
primarily to support the agrarian reform program.
Statement no. 2: It aims to achieve a dignified existence for the small farmers free from
pernicious institutional restraints and practices.
A. Only the first statement is true and correct. C. Only the second statement is true and correct.
B. Both statements are true and correct. D. Both statements are untrue and incorrect.

____35. The Comprehensive Agrarian Reform and cooperatives are meant to ___________.
A. eradicate poverty in the country C. to make all citizens equal
B. bridge the gap between the rich and the poor D. to improve on the country’s literacy rate

____36. When parents decide to send their children to private school and pay their tuition fee instead
of sending them to the public school, they don’t get their share in the benefit derived from the taxes they
pay. This is a case of ________________.
A. social justice B. double jeopardy C. double taxation D. social inequity

____37. Which one CORECTLY applies to Philippine foreign trade?

A. Philippine expenditure exports and earning from imports fluctuate.
B. The Philippine spends less on imports than it earns from exports.
C. The Philippine expenditure on imports is balanced with its earnings from exports.
D. The Philippine spends more on imports than it earns from exports.

____38. The ultimate objective of the Comprehensive Agrarian Reform is to _________.

A. ensure the cultivation of all idle lands C. distribute arable lands to the landless
B. abolish share tenancy in favor of lease tenancy D. establish owner–cultivated farms
____39. What is TRUE of a progressive system of taxation?
A. The rate of tax increases as the income tax base or income bracket increases.
B. the tax is equal regardless of class and place.
C. The rate of tax decreases as the income tax base decreases.
D. The rate of tax increases as the income tax base decreases.

____40. I rent out of P 10,000 per month my only building and a lot to the Jesus is Lord group which
uses it exclusively for religious purposes. I am exempt from payment of _________.
A. property tax B. professional tax C. income tax D. community tax

____41. You are a member of a cooperative which operates taxis tricycle buses. Of which type of
cooperative are you a member of?
A. Service cooperative C. Marketing cooperative
B. Multipurpose cooperative D. Producers cooperative

____42. You have a property of P500, 000. The tax is 1% he pays P5000. If his property is worth P1,
000,000 he pays P10, 000. Which does this illustrate?
A. Progressive taxation C. Equity in taxation
B. Uniformity of taxation D. Equality in taxation

____43. Which in an unlawful act of escaping from payments of taxes?

A. evasion B. avoidance C. Exemption D. Shifting

____44. Which is required of cooperative members for the operation of their cooperative?
A. Share capital B. Interest on share capital C. Net surplus D. Patronage refund

____45. The primary purpose of taxation is to _______.

A. Raise revenue for the support of government C. sortify the government against invaders
B. reduce inequalities in wealth and incomes D. make the country leading industrialized country
in the world

____46. Which is/are essential for the Comprehensive Agrarian Reform Program to truly succeed?
I. Granting the beneficiaries the right to sell the piece of land awarded to them
II. Change of heart the landlords and lawmakers
III. Education of the beneficiaries
A. II and III B. I, II and III C. II only D. III only

____47. Which is/are TRUE of cooperatives and the Comprehensive Agrarian Reform?
I. Intended to eliminate poverty in Philippine society
II. Mean to alleviate poverty
III. Are programs for people empowerment
A. II and III B. III only C. II only D. I and III

____48. Which assumption underlies the Comprehensive Agrarian Reform Program?

A. People are more productive if they own what they cultivate.
B. Our country has very few landed people and very many landless.
C. The wealth of the country is concentrated in the lands of a few.
D. There is so much poverty in the country because of overpopulation.

____49. What does “capital” in economics refer to?

A. Investments and loss computed C. Money/ machines invested to transact business
B. Outcome of a business transaction D. profit and labor spent for the business

____50. What result when the government spends more than what it collects in the form of taxes?
A. Excessive allotment C. Fiscal deficit
B. Fiscal overspending D. erroneous appropriations

_______________________________THE END______________________________

MARK 11:24
“Therefore, I tell you, whatever you ask for in prayer,
believe that you have received it, and it will be yours.”

God bless you! 😊