IDENTIFICATION

Direction: Identify the following statements. Write the correct answer on the blanks provided before each number.

_______________________1. It is the application of microeconomic theory and methodology to problems faced by decision-makers in the
public, private and not-for-profit sectors.
_______________________2. It is the primary goal of the firm.
_______________________3. These are costs of attracting a resource from its next best alternative use.
_______________________4. When a firm earns zero economic profit, total revenue is equal to total economic cost, therefore accounting
profit is ______________.
_______________________5. This theory of profit states that “The higher the risk, the higher the return”.
_______________________6. This theory states that above-normal profits can arise because of the exceptional managerial skills of well-
managed firms.
_______________________7. One firm is effectively able to dominate the market and potentially earn above-normal rates of return for a
long period of time.
_______________________8. All firms should tend to earn a long-run equilibrium normal rate of profit.
_______________________9. It suggests that above normal profits are the reward for successful innovation.
_______________________10. Shareholder wealth is measured by the __________ value of a firm’s common stock,
_______________________11. which is equal to the _________ value of all expected future cash flows to equity owners.
_______________________12. It is a resource-allocation model that can be used to evaluate programs or investments on the basis of
magnitude.
_______________________13. It is the desire, willingness and ability to buy a good or service.
_______________________14. It says that our additional satisfaction tends to go down as we consume more and more units.
_______________________15. It is the various quantities of a good/service that producers are willing to sell at all possible market prices.
_______________________16. It is the amount by which the quantity supplied is higher than the quantity demanded.
_______________________17. It is the amount by which the quantity demanded exceeds quantity supplied.
_______________________18. The demand for a good is _______ if the percentage change in its price exceeds percentage change in
quantity demanded.
_______________________19. The demand for a good is ________ if the percentage change in its price is equal to its percentage change
in quantity demanded.
_______________________20. The demand for a good is _______ if the percentage change in price is less than its percentage change in
in quantity demanded.

COMPUTATION
Direction: Compute the following. Write the correct answer on the blanks provided.

For items 21-22:

Income Consumption Savings
2018 P 1,500 P 600 P 900
2017 P 1,000 P 300 P 700

21. Marginal propensity to save is ____________.

22. Marginal propensity to consume is _________.

For items 23-24:

Price Quantity Demanded
2018 P 1,500 100 units
2017 P 1,200 60 units

23. Quotient of changes in quantity demanded and price is __________.

24. Therefore, the demand is ______________.

For items 25-26:

Price Quantity Demanded
2018 P 1,300 50 units
2017 P 1,200 60 units

25. Quotient of changes in quantity demanded and price is __________.

26. Therefore, the demand is ______________.

For items 27-28:

Price Quantity Demanded
2018 P 1,200 80 units
2017 P 1,000 100 units

27. Quotient of changes in quantity demanded and price is __________.

28. Therefore, the demand is ______________.

For items 29-30:

Old Price New Quantity New Price Old Quantity
P 150 60 units P 220 80 units

29. Coefficient of changes in quantity demanded and price using long method is ________.
30. Therefore, the demand is ______________.

ENUMERATION
Direction: Enumerate the following. Write the correct answer on the blanks provided.

Examples of Agency Costs
31. _______________________
32. _______________________
33. _______________________
34. _______________________
Caveats to Maximizing Shareholder Value Goals of Managerial Economics
35. _______________________ 38. _______________________
36. _______________________ 39. _______________________
37. _______________________ 40. _______________________

LET’S GRAPH IT!

Direction: Create demand and supply curve given the following problems, and give a brief explanation about what happened. (2 points each)

DEMAND CURVE
41. The income of the Gargantuans declines after a typhoon hits the island.

42. Puerto Princesa is named on of the most beautiful islands in the world
and tourism to the island expects to double around 2021.

43. The boomerang manufacturers decided to add a “money back guarantee” on

their product, which increases the popularity for them.

SUPPLY CURVE
44. The government of the Philippines adds new tax rate from 20% to 50% to the
boomerang production.

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45. The price of plastic, a major input in producing boomerang, drastically increases.

46. The government of New Zealand adds a subsidy to boomerang production.

SUPPLY AND DEMAND AT WORK

47. The income of the Chapel Hill residents declines after an early loss during
March Madness.

48. After the release of Alan Greenspan’s first jazz flute album, purple tie producers
are expecting a huge increase in demand and thus increase in price.

49. Purple ties are named by BB Magazine as a “must have” for all young
professionals. At the same time, a new textile machine decreases
the cost of producing purple ties.

50. The price of pink ties (related good that most purple ties producers also
produce) rises as spring approaches. The consumers in Chapel Hiil
begin to expect purple ties to be put on sale since spring is coming,
so they put off purchasing.

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 IN ECONOMICS, THERE ARE LOT OF SHIFTS YOU HAD ENCOUNTERED.
IN REALITY, ESPECIALLY IN BSA PROGRAM, NO!

TO GOD BE THE GLORY!

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