Questions for Microeconomics

1. It refers to the tabular representation of the relationship between price and quantity demanded.
a.) Law of demand c.) Demand schedule
b.) Law of supply d.) Supply schedule
2. Movements along a given demand curve are caused by changes in:
a.) Income c.) Tastes and preferences
b.) Price d.) Related goods
3. A downward shift in the demand curve will bring about:
a.) An increase in equilibrium quantity and an increase in equilibrium price.
b.) An increase in equilibrium price and decrease in equilibrium quantity
c.) An increase in equilibrium quantity and a decrease in equilibrium price
d.) A decrease in equilibrium price and decrease in equilibrium quantity
4. The quantity of mango bought in the market is likely to increase when:
a.) The price of mangosteen increases
b.) The price of mango increases
c.) Mango is linked to cancer by new research
d.) The general income of the population drops
5. Which of the following will not cause a shift in the demand curve for pork?
a.) A rise in the price of some goods which consumers regard as substitute for pork
b.) A change in the price of pork
c.) An increase in incomes of pork consumers
d.) A change in people’s tastes with respect to pork
6. If there is a negative relationship between the price of good X and the demand for good Y, then:
a.) Goods X and Y are substitutes
b.) Goods X and Y are complements
c.) Good Y is an inferior good
d.) Good Y is a normal good
7. A market supply curve:
a.) Can be obtained by adding the supply curves of all the biggest sellers in the market
b.) Always slopes downward
c.) Tells how sellers as a group will behave in a perfectly competitive market
d.) Can only be derived if the market is nationalized
8. The difference between change in supply and change in quantity supplied is:
a.) None, they mean the same thing
b.) The first implies a shift of the supply curve upwards, while the second implies a change in the slope of
the supply curve
c.) The first implies a shift in the entire supply curve, while the second is just a movement along the same
supply curve
d.) The first is a movement along the same supply curve, while the second implies a shift of the entire
supply curve
9. In a competitive market, price is determined exclusively by:
a.) The costs of producing the good in question
b.) The supply of the good
c.) The decisions of both buyers and sellers in the market
d.) The interaction of tastes and demand
10. A situation where there is excess demand for goods in the market.
a.) Surplus c.) Producer surplus
b.) Shortage d.) Consumer surplus
11. Commodities whose demand varies directly with money income refers to:
a.) Substitute goods c.) normal goods
b.) Complementary goods d.) inferior goods
12. The supply of a product is said to increase when
a.) The supply curve shifts upward c.) the supply curve shifts downward
b.) The supply curve shifts leftward d.) the price of the good increases
 For item 13 – 14, consider the following demand and supply equations for Rice:

Qd = 750 – 15P Qs = -150 + 30P

13. The equilibrium price of Rice is:

a.) 15 b.) 5 c.) 20 d.) 90
14. The equilibrium quantity of Rice is:
a.) 45 b.) 450 c.) 4.5 d.) cannot be determined
15. Surplus of Rice will occur if:
a.) Its price will be higher than the equilibrium price
b.) Its price will be lower than the equilibrium price
c.) There will be additional Rice outlets
d.) There will be less Rice outlets
16. Which of the following is least likely to have an elastic demand?
a.) Gasoline c.) Cars
b.) Imported wine d.) Jewelries
17. If the cross-price elasticity of demand between meat and fish is 2.50, we can say that:
a.) Meat and fish have elastic demand
b.) Meat is a normal good
c.) Meat and fish are substitute goods
d.) A and B are correct

For questions 18 and 19 refer to the information below:

Price Quantity Demanded
P2.00 100
P3.00 90
P4.00 70
P5.00 50
18. If price increased from P2.00 to P4.00, the elasticity of demand would be:
a.) -0.05 b.) -1.14 c.) -20 d.) -0.53
19. Therefore, the demand for the good in number 18 is said to be:
a.) Elastic c.) unitary
b.) Inelastic d.) Perfectly elastic
20. From your answer in no. 19, an increase in price would result in:
a.) Increase in total revenue c.) Maximum total revenue
b.) Decrease in total revenue d.) Cannot be determined
21. Which of the following would make the demand for a product elastic?
a.) It is unique c.) it has many possible uses
b.) It is very cheap d.) it is considered a necessity
22. The short-run is:
a.) A period of time shorter than one year
b.) The planning period wherein some resources are fixed
c.) The planning period wherein all resources are fixed
d.) The planning period wherein all resources are variable
23. A total product curve indicates the relationship between:
a.) Input and price c.) input and output
b.) Input and variable cost d.) output and price
24. An element of the production function which measures the efficiency for the use of the fixed input:
a.) Total Product c.) Marginal Product
b.) Average Product d.) Total Input
25. Another element of the production function which measures the efficiency for the use of the variable input:
.a.) Total Product c.) Marginal Product
b.) Average Product d.) Total Input
26. The stage of production which is considered to be the rational stage of production:
a.) Stage 1 b.) Stage 2 c.) Stage 3 d.) Stage 4
27. In the first stage of production:
a.) Marginal product is increasing
b.) Total product is increasing at an increasing rate
c.) Average product is increasing
d.) Average product is greater than marginal product
28. The boundary line between stage II and stage III of production given one variable input is set where:
a.) Total product is diminishing
b.) Marginal product is equal to average product
c.) Average product is maximum
d.) Marginal product is equal to zero
29. The Law of Diminishing Marginal Productivity:
a.) Specifies that the output obtained from the successive input utilization increases over time
b.) Specifies that output obtained from the successive utilization of an input decreases over time
c.) Specifies that as producers utilize successive units of an input, the incremental output derived from
each additional unit decreases
d.) All of the above
30. The total amount of product produced divided by the number of units an input used is:
a.) Total product c.) Marginal product
b.) Average product d.) none of the above
31. The addition to total output resulting from employing an additional unit of resource is:
a.) Average product c.) marginal product
b.) Total product d.) a production function
32. When the total product falls;
a.) The average product is zero c.) the average product is declining
b.) The marginal product is zero d.) the marginal product is negative
33. The main difference between the short run and the long run is that:
a.) The long run always refers to a time period of one year or longer
b.) In the short run, one or more inputs is fixed
c.) In the long run, only one variable can be fixed
d.) In the short run all inputs are variable
34. The cost that a firm incurs in purchasing or hiring any factor of production is referred to as:
a.) Explicit cost c.) variable cost
b.) Implicit cost d.) Fixed cost
35. All of the following curves are U-shaped except:
a.) The average variable cost (AVC) curve
b.) The average fixed cost (AFC) curve
c.) The average cost (AC) curve
d.) The marginal cost (MC) curve
36. Marginal cost and average cost are related in this way:
a.) When MC is less than AC, AC is falling
b.) When MC is greater than AC, AC is falling
c.) When MC is equal to AC, MC is at a minimum
d.) None of the above
37. It is the cost that does not vary with the level of output:
a.) Total Fixed Cost (TFC) c.) Total Cost (TC)
b.) Total Variable Cost (TVC) d.) Average Fixed Cost (AFC)
38. An example of a fixed cost is:
a.) Wages of farm labourers
b.) Interest payments on loan used to purchase farm machinery
c.) Cost of feeds and biologics
d.) Gasoline used to run the mudboat
39. Specialization and division of labor will likely to result in:
a.) Economies of scale
b.) Diseconomies of scale
c.) Law of diminishing marginal returns
d.) Any of the above
40. Implicit costs are:
a.) Equal to total fixed costs
b.) Comprised entirely of variable costs
c.) Payments for self-employed resources
d.) Always greater in the short run than in the long run
41. These are actual costs or “out of pocket” expenses incurred in the production of goods and services:
a.) Implicit costs c.) Explicit costs
b.) Variable costs d.) Fixed costs
42. As output increases, average fixed costs:
a.) Increase c.) remain constant
b.) Decrease d.) first increase then decrease
43. The proportion of total expenditure shared by each unit of output is:
a.) TC b.) MC c.) AVC d.) AC
44. The cost associated with producing another unit of output is:
a.) TFCb.) TC c.) MC d.) AVC
45. If a farmer harvested 2 tons of corn and the selling price of corn per kilo is P12.00, how much is the total
revenue/sales of the farmer?
a.) P20,000 b.) 22,000 c.) 24,000 d.) 26,000
46. If he has incurred a total fixed cost of P5,000.00, how much is his average fixed cost per sack?
a.) P100.00 b.) P125.00 c.) P150.00 d.) P50.00
47. If his total variable cost incurred is P3,000.00, how much is his average variable cost per kilo?
a.) P1.50 b.) P2.00 c.) P75.00 d.) P60.00
48. How much is his total costs incurred?
a.) P3,000 b.) P5,000 c.) P8,000 d.) P10,000
49. Which of the following would contribute most to a firm experiencing “economies of scale”:
a.) Rising long run average costs
b.) The law of diminishing marginal returns
c.) Specialization of production within a firm
d.) Deterioration of information and control within a firm
50. Economies and diseconomies of scale occur mainly because:
a.) Of the law of diminishing returns
b.) Firms in an industry must be relatively large in order to use the most efficient productive techniques
c.) Of the inherent difficulties involved in managing and coordinating a large business enterprise
d.) The short run average total cost curve rises when marginal product is greater than average total cost
 Answers to Questions
1. C 11. C 21. C 31. C 41 .C
2. B 12. A 22. B 32. D 42. D
3. D 13. C 23. C 33. B 43. D
4. A 14. B 24. A 34. A 44. C
5. B 15. A 25. B 35. B 45. C
6. B 16. A 26. B 36. A 46. B
7. C 17. C 27. B 37. A 47. A
8. C 18. D 28. D 38. B 48. C
9. C 19. B 29. C 39. A 49. C
10. B 20. A 30. B 40. C 50. C