DATA CENTER COLLEGE OF THE PHILIPPINES

Mktg Mngt 10: Financial Management

QUIZ #3
Microeconomics

Name: ______________________________________ Course: ____________________ Score: _______________

I. True or False. If the statement is correct write XYX and if the statement is incorrect write YXY.

1. Excise taxes can be used to generate revenue to the government, but also to alter the behavior of consumers and
discourage consumption of certain products. TRUE
2. Assume that the production of corn and wheat utilize the same resources (substitutes in production). If the price of
corn increases, then we can expect the price of wheat to also increase, all else held constant. FALSE
3. The equilibrium price is the price level at which there is no surplus or shortage in the market. TRUE
4. The ceteris paribus assumption means that all other relevant factors remain unchanged. TRUE
5. Operating system software such as Windows is a complement product to computer processors. If the price of
computer processors declines, then we should expect the demand for operating system software to decrease.
FALSE
6. Car manufactures use many commodities in their production process. If prices of those commodities increase,
then we should expect the supply curve to shift downwards (to the right). FALSE
7. If buyers and sellers of homes start to expect inflation in housing values, then both, the current demand and the
supply functions will increase. FALSE
8. If the cost of making bicycles falls, the price goes down, causing the demand curve to shift to the right. TRUE
9. The basic economic problem is Scarcity. TRUE
10. Demand is the desire to have some good or service. FALSE
11. Price is the major factor that influence the demand and supply TRUE
12. Examples of elastic demand are the luxury goods. TRUE
13. No good or service is ever really unit elastic TRUE
14. The value of money is determined by the interplay of supply and demand. TRUE
15. Money supply is an important price determining factor and therefor, any change in the quantity of money will result
to variation in the price of goods and services. TRUE

II. Multiple choice. Fully shade the circle corresponding your answer in each question. In case none of the choices
provided is correct, shade “e”.

1. A local grocery store orders 200 cases of Pepsi each week and sells them at a price of $6.00 per case. At the end
of the first week, they have only sold 160 cases. What economic situation is the grocery store facing and what will
have to happen to price in order for equilibrium to be attained?
a. surplus; price will rise. b. surplus; price will fall.
c. shortage; price will rise. d. shortage; price will fall.
2. Which of the following can lead to an increase in the supply for good X?
a. a decrease in the number of sellers of good X.
b. an increase in the price of inputs used to make good X.
c. an increase in consumers' income, assuming good X is a normal.
d. an improvement in technology used in production of good X.
3. An increase in the price of electricity will:
a. increase the demand for kerosene heaters.
b. increase the demand for light bulbs.
c. increase the demand for stereos.
d. increase the demand for TVs.
4. Which of the following events will cause an increase in the market demand for Guinness (a brand of beer)?
a. A decrease in the price of Guinness.
b. An increase in the price of Heineken (another brand of beer).
c. An increase in the price of Planters peanuts (a complementary good).
d. An increase in income, if Guinness is an inferior good.
5. Unionized workers may be able to negotiate with management for higher wages during periods of economic
prosperity. Suppose that workers at automobile assembly plants successfully negotiate a significant increase in
their wage package. How would the new wage contract be likely to affect the market supply of new cars?
a. Supply will shift to the right.
b. Supply will shift to the left.
c. Supply will not shift, but the quantity of cars produced per month will decrease.
d. Supply will not shift, but the quantity of cars produced per month will increase.
6. If automobile manufacturers are producing cars faster than people want to buy them,
a. there is an excess supply and price can be expected to decrease.
b. there is an excess supply and price can be expected to increase.
c. there is an excess demand and price can be expected to decrease.
d. there is an excess demand and price can be expected to increase.
7. If a computer software company introduces a new program and finds that orders from wholesalers far exceed the
number of units that are being produced,
SET 1
 a. there is an excess supply and price can be expected to decrease.
b. there is an excess supply and price can be expected to increase.
c. there is an excess demand and price can be expected to decrease.
d. there is an excess demand and price can be expected to increase.
8. Market equilibrium refers to a situation in which market price
a. is high enough to allow firms to earn a fair profit.
b. is low enough for consumers to buy all that they want.
c. is at a level where there is neither a shortage nor a surplus.
d. is just above the intersection of the market supply and demand curves.
9. If the price of a good increases while the quantity of the good exchanged on markets increases, then the most
likely explanation is that there has been
a. an increase in demand.
b. a decrease in demand.
c. an increase in supply.
d. a decrease in supply.
10. Assume that firms in an industry observe a 10% increase in the productivity of labor, but to get there they had to
increase the cost of labor by 5%. What should be expected to happen in the output market as a result of this
development?
a. The supply should increase
b. The supply should decrease
c. The supply should remain unchanged
d. The demand should increase
e. The demand should decreased
11. Which of the following will not cause the demand for product K to change?
a. a change in the price of close-substitute product J
b. an increase in consumer incomes
c. a change in the price of K
d. a change in consumer tastes
e
12. Which of the following would not shift the demand curve for beef?
a. a widely publicized study which indicates beef increases one's cholesterol
b. a reduction in the price of cattle feed
c. an effective advertising campaign by pork producers
d. a change in the incomes of beef consumers
13. If the price of K declines, the demand curve for the complementary product J will:
a. shift to the left.
b. decrease.
c. shift to the right.
d. remain unchanged.
14. All the following shift the demand curve for automobiles to the right except:
a. the local factory gives a big raise to its employees.
b. a brand new automobile dealership opens in town.
c. the price of gasoline falls.
d. None of the Above
15. If the cost of computer components falls, then
a. the demand curve for computers shifts to the right.
b. the demand curve for computers shifts to the left.
c. the supply curve for computers shifts to the right
d. the supply curve for computers shifts to the left

Bonus Question: (5 points) 

MASAYA KA KAPAG MASAYA SIYA. MASAYA SIYA SA PILING NG IBA. MASAYA KA PA BA? Defend your answer

Prepared by: Christian Jay R. Marcos.

SET 1