I-INSTRUCTION: IDENTIFY WHAT IS BEING ASKED IN THE QUESTION. WRITE YOUR ANSWER BEFORE EACH NUMBER. NO ERASURES (2POINTS EACH)
________________1. The quantity of a good that consumers are willing and able to purchase at various prices during a given period of time. ________________2. Describes how much pleasure or satisfaction is gained from an increase in consumption. ________________3. It is the change in demand for a good or service caused by a change in a consumer’s purchasing power due to a change in real income. ________________4. A fundamental principle which states that there is an inverse relationship between price and quantity demanded. ________________5. A table that shows the quantity demanded of a good or service at different price levels. ________________6. States that the marginal utility of a good or service declines as more of it is consumed by an individual. ________________7. A curve or line showing the quantities of a particular good demanded at various prices during a given period of time. ________________8. It is the decrease in sales for a product that can be attributed to consumers switching to cheaper alternatives when its price rises. ________________9. The amount demanded at a particular price. ________________10. A consumer’s likes and dislikes. ________________11. A relation showing the quantities of a good producers are willing and able to sell at various prices.
II-MODIFIED TRUE OR FALSE. WRITE TRUE IF THE STATEMENT IS CORRECT AND IF IT IS NOT, CHANGE THE UNDERLINE WORD TO MAKE IT RIGHT. NO ERASURES (2 POINTS EACH)
________________1. Law of supply is the quantity of a good supplied during a given time period is usually directly related to its price. ________________2. Demand is a relation showing the quantities of a good producers are willing and able to sell at various prices ________________3. Supply schedule is a line or graph showing the quantities of a particular good supplied at various prices during a given period of time. ________________4. Elasticity of Demand refers on how sensitive demand for a good is compared to changes in other economic factors, such as price or income. ________________5. Supply Curve is a table that shows the quantity supplied at each price ________________6. The price is unitary if it is greater than 1 ________________7. The price is perfectly elastic if it is less than 1 ________________8. The price is elastic if it is exact 1 ________________9. The price is inelastic if it is infinite. ________________10. The price is perfectly inelastic if it is equal to 0
COMPUTE THE FOLLOWING: For each situation, find the percent change in price and the resulting percent change in quantity demanded. Box your final answer. No solutions considered as wrong.
1. The quantity of milk demanded by consumers depends on the price. When the price of a liter of milk rose from P60 to P67, sales fell from 200 liters per day to 190 liters per day. (5pts) 2. The quantity of pizzas ordered changes when the price of pizza changes. When a pizza sold for P80 instead of P100, sales grow 80 pizzas per day to 120 pizzas per day. (5pts)
Compute the elasticity of demand in price (5pts each)
1. Q2= 300 P2= 130 Q1= 180 P1= 160
2. Q2= 400 P2= 180
Q1= 150 P2= 240
Compute the elasticity of supply in price (5pts each)
