INSTITUTE OF BUSINESS AND MANAGEMENT

BS ENTREPRENEURSHIP FINAL EXAM: QUESTIONNAIRE

Microeconomics 1st Semester, AY 2024-2025
NAME: _____________________________________ SECTION: _______________________
MULTIPLE CHOICE (60 Points). Read each statement carefully then identify what is being described by encircling the
letter of the correct answer.

1.Normally the demand curve will have a 8.Which of the following is not a cause of the shift in
_______________ shape. demand for a product?

a) Upward sloping a) Change in the price of substitutes

b) Downward sloping b) Change in the income of a consumer
c) Vertical
d) Horizontal c) Change in the price of a product
d) None of the above
2. Which of the following is an assumption made while
drawing the demand curve? 9.When the demand for a product is perfectly inelastic, a
price increase will result in __________.
a) The demand curve must be linear
b) The price of substitutes should not change
a) A decrease in quantity demanded of the
c) The quantity demanded should not change
product
d) The price of the commodity should not change
b) No change in the total income from a
3. The elasticity for the demand of durable goods is product
__________. c) An increase in the total income from a
product
a) Equal to unity
b) Greater than unity d) A reduction in the total income from a
c) Less than unity product
d) Zero
10.In case the price of a product and the total revenue
4.Law of demand shows a relation between the from that product move in the same direction, then the
___________. demand is ____________.

a) Quantity demand and quantity supply of a a) Perfectly elastic

commodity
b) Inelastic
b) Income and quantity demand of a commodity
c) Price and quantity of a commodity c) Elastic
d) Income and price of a commodity d) Unrelated
5.if the quantity demanded of a commodity is
11.Would an increase in demand for a product cause the
unresponsive to change in prices, then the demand of that supply curve to shift in any direction?
commodity is ________.

a) Perfectly inelastic a) No effect on supply

b) Elastic b) Change in the slope of a supply curve
c) Unit elastic c) The supply curve will move to the right
d) Inelastic
d) The supply curve will move to the left
6.When the price of a product falls by 10% and its demand
rises by 30%, then the elasticity of demand is _________. 12.If the elasticity of supply is greater than one, the supply
curve would be _______.
a) 13
b) 3 a) Touching y-axis
c) 10
b) Passing through the origin
d) 30
c) Vertical
7.When the elasticity of demand for a commodity is very d) Horizontal
low, it shows that the product ________.

a) Has little importance in the total budget a. Rightward

b) Is a luxury b. Leftward
c) Is a necessity c. None of the above
d) None of the above
Answer: c

Which of the following is not a cause of the shift in b) In May 2019, a firm was providing 5000 kg of
sugar at a market price of Rs. 30 per kg. But in
demand for a product?
13.In a particular year, the farmers experienced dry 19.______ leads to an increase in the supply of a
weather. If all other factors remain the same, the supply commodity without a change in its price.
curve of wheat for farmers will shift to the ________
direction. a) Rise in supply
b) Contraction in supply
a) Downward
c) Expansion in supply
b) Rightward
c) Leftward d) Fall in supply
d) None of the above
20.If price changes by 1% and supply changes by 2%,
14.In May 2019, a firm was providing 5000 kg of sugar at then the supply is ______.
a market price of Rs. 30 per kg. But in June 2019, the
supply of sugar decreased to 4500 kg at a market price of a) Static
Rs. 20 per kg. This change shows that the supply of sugar b) Indeterminate
is _____.
c) Inelastic
a) More elastic d) Elastic
b) Less elastic
21. If the income of a consumer increases or the price of a
c) Perfectly inelastic complementary good falls, then the __________.
d) Perfectly elastic
a) The demand curve for the product shifts
15.If the market supply curve for a product shifts rightward
rightwards, what is the best possible explanation for this b) The demand curve for the product shifts
shift? leftward
c) The supply curve for the product shifts
a) Increase in the price of raw materials rightward
b) Introduction of a tax on that product by the d) The supply curve for the product shifts
government leftward
c) Introduction of a new technique that
makes the production of that commodity 22..Because of increasing marginal costs, most supply
cheaper curves ________.
d) An advertising campaign that is
successful in promoting the product a) Have a positive slope
b) Have a negative slope
16.Which of the following scenarios will not shift the
demand curve for a particular product? c) Are horizontal
d) Are vertical
a) A change in the income of the consumers
of that product 23.Which of the following metrics is not a constant factor
b) Effective advertising campaign by while moving upwards along the supply curve?
producers of a substitute good
a) The price of the commodity
c) A reduction in the price of the raw material
for that product b) The number of sellers
d) A widely publicized study that says the c) Expected future prices
product is harmful to the health of d) Cost of the resources used for producing
consumers that commodities

17.A firm’s supply curve is on an upward slope because 24.An increase in the number of restaurants serving fast-
______. food leads to _______.

a) The production costs of additional units of a) Growth in the demand of fast-food meals
output will rise beyond a point
b) Increase in the supply of fast-food meals
b) Consumers see a positive relationship
c) Increase in the price of fast-food meals
between price and quality
d) Growth in the demand for substitutes of
c) Expansion of production leads to the use
fast-food meals
of inferior inputs
d) None of the above 25.When the quantity demanded of a goods is equal to the
quantity supplied of that goods, then ___________.
18.Which of the following scenarios will not lead to a
change in demand for a product? a. There is a surplus
b. The government is intervening in the
a) A change in the tastes of its consumers
market
b) A change in the price of that product
c. There is a shortage
c) An increase in the income of its
d. None of the above
consumers
d) None of the above

Answer: d
26.Which of the following goods would you 31.A monopolist learns that the own price
expect to have the largest income elasticity of a product it manufactures is
elasticity of demand? 0.5. What would be the correct action for
this firm to take if it wishes to increase its
a) rice. profits?
b) toothpaste.
c) beer. a) Raise the price because
d) stereo equipment. demand for the product is
inelastic.
27.The cross price elasticity between two b) Lower the price because
products is found to be -1/2. From this demand for the good is elastic.
you know that the two products are: c) We need information on the
firm's cost structure in order
a) normal. to answer this question.
b) inferior. d) Raise the price because
c) necessities. demand is elastic.
d) complements. e) Lower the price because
e) substitutes. demand is inelastic.

28.If the cross price elasticity between 32.Cheryl's income elasticity for good A is
goods B and A is -2 and the price of good -2.5. Her current income is $100,000 and
B increases by 5%, the quantity she normally buys 100 units of good A per
demanded of good A will: year. If her income increases to $110,000
how many units of good A will she buy?
a) increase by 5%
b) increase by 10% a) 250.
c) decrease by 2% b) 75.
d) decrease by 5% c) 125.
e) decrease by 10% d) 100.
e) 82.5.
29.Karen's income elasticity of demand for
bottles of her favorite wine is 1.5. 33.After paying an economist to estimate
Currently her income is equal to $50,000 the price elasticity of demand for socks,
and she normally buys 500 bottles per sock manufacturers, expecting to increase
year (Unless Karen entertains a lot she revenues, decide to reduce the price of
has a problem). If her income increases to socks. The estimate of demand elasticity
$55,000 how many bottles of her favorite could have been:
wine will she buy per year?
a) .5
a) 425 b) .25
b) 550 c) .75
c) 575 d) -.75
d) 515 e) 1.75
e) 675
34.If the price elasticity of demand for
30.A firm learns that the own price some good is estimated to be 4. then a
elasticity of a product it manufactures is 1% increase in price will lead to a:
3.5. What would be the correct action for
this firm to take if it wishes to raise its a) 20% increase in quantity
total revenue? demanded.
b) 0.25% decrease in quantity
a) Raise the price because demanded.
demand for the product is c) 0.5% increase in quantity
inelastic. demanded.
b) Lower the price because d) 4% decrease in quantity
demand for the good is elastic. demanded.
c) We need information on the e) 4% increase in quantity
firm's cost structure in order demanded.
to answer this question.
d) Raise the price because 1. If coffee and tea are substitutes, what do
demand is elastic. we know for certain about the cross-price
elasticity of demand for coffee with
35.If coffee and tea are substitutes, what 38.On the front page of the September
do we know for certain about the cross- 27, 1996 New York Times is an article with
price elasticity of demand for coffee with the headline ``U.S. Census Finds First
respect to the price of tea? Income Rise in Past Six Years.'' The text
reports that ``much of the rise in
a) It is greater than 1. household incomes was in the Midwest.''
b) It is negative. Based on this information alone, what
c) It is positive. would you expect has been happening to
d) they are both inferior goods. equilibrium prices and quantities sold of
e) It is equal to one. new cars in the Midwest during this period
of increasing incomes.
36.Which of the following might cause the
own price elasticity of demand for product a) Equilibrium prices have
Z to go from .75 to 1.25. probably been rising and
quantities falling since supply
a) A decrease in the of new cars is probably
manufacturing cost of Z. inelastic.
b) The introduction of a new b) Equilibrium prices have
product that is considered a probably been rising and
close substitute for Z. quantities falling since demand
c) An improvement in the for new cars is probably price
manufacturing technology for and income inelastic.
Z. c) Equilibrium prices have
d) More firms begin producing probably been rising and
product Z. quantities increasing since
e) A change in consumer tastes income elasticity of demand
that causes consumers to feel for new cars is probably
that consuming Z is an positive and greater than one.
important enhancement to d) Equilibrium prices have
their image. probably been falling and
quantities increasing since
37.Candice currently spends $200 per income elasticity of demand
month on long distance telephone calls. If for new cars is probably
the telephone company decides to reduce negative.
the rate from 10 cents a minute to 5 cents
a minute then: 39.Jane considers tofu a normal good and
peanut butter an inferior good. We can
a. whether she spends more or less predict that with an increase in her income
than $200 per month depends on she will consume:
whether long distance telephone
calls are a normal good or an a) more of both goods.
inferior good. b) less of both goods.
b. the fact that demand curves are c) she will not change her
downward-sloping implies she will consumption of peanut butter
spend more than $200 per month d) more peanut butter and less
on long distance telephone calls. tofu.
c. she will spend less than $200 per e) more tofu and less peanut
month on long distance telephone butter.
calls because the new price is an
effective price floor. 40.The government is considering an
d. whether she spends more or less increase in the tax on gasoline. They know
than $200 per month on long that the own-price elasticity of demand for
distance telephone calls depends gas is .25. The current price is $1.00 per
on whether her demand is elastic gallon. They are willing to allow the
or inelastic. quantity of gas sold to fall by 10%. What
2. On the front page of the September 27, tax increase (in cents per gallon) would
1996 New York Times is an article with lead to a 10% reduction in quantity
the headline ``U.S. Census Finds First demanded? (we assume that the entire
Income Rise in Past Six Years.'' The tax shows up in the price at the pump)
text reports that ``much of the rise in
household incomes was in the a. .10
 46. Total utility describes
a) .04 a) the benefit gained from all consumption
b) .10 b) an increase in consumption multiplied by
c) .25 the gain in utility
d) .29 c) total consumption multiplied by marginal
e) .40 utility
d) total consumption divided by marginal
41.The post office charges $1 to mail an iguana utility.
overseas. At this price 1,000 iguana are mailed
each week. To increase revenue, the post office 47) Which of the following statements is true?
is considering an increase in the price of a) As more of a good is consumed, its total
overseas iguana delivery to $2. Post office utility increases,unless the good is subject
researchers have determined that the own price to diminishing marginal utility
elasticity of demand for its iguana delivery b) As more of a good is consumed, its total
service is 1/5. If the post office increases its utility increases,even if the good is
price to $2: subject to diminishing marginal utility.
c) No two people have identical utility
a) revenue will fall by $300. functions, just as no two people have
b) revenue will increase by $300. identical fingerprints
c) revenue won't change. d) Both A and C above.
d) revenue will fall by $600. 48) Which of the following is NOT an assumption
e) revenue will increase by $600. of marginalutility theory?
a) A consumer derives utility from the goods
42.If college enrollments drop by 10% when consumed.
textbook prices double; textbooks and b) Each additional unit of consumption yields
enrollments are __________ goods and their additional utility.
cross price elasticity is __________. c) Consumers maximize their total utility.
d) As more of a good is consumed, the
a) complementary; -0.5 decrease in the marginalutility from the
b) substitute; 5 good means that the total utility from the
c) complementary; -0.1 gooddecreases also.
d) substitute; 0.5 49) The satisfaction that a person receives from
e) complementary; -5 consuming agood or service is called ________.
a) total satisfaction
43.Kevin's income elasticity for good A is equal b) marginal benefit
to -1.5. His current income is $40,000 per year c) utility
and he buys 200 units of good A annually. If his d) marginal utility
income falls to $36,000 how many units of good
A will he purchase?
50.Marginal utility is the
a) 230. a) total satisfaction that a person gets from
b) 170. the consumption of all of the units of a good
c) 150. consumed.
d) 125. b) change in satisfaction that results from a one-
e) 250. unit increase in the quantity of a good
consumed.
44) Utility is best defined as c) maximum price that a consumer is willing to
A) the amount one is willing to pay for a pay for an additional unit of a good.
good. d) additional cost to a consumer when
B) the price of a good. an additional unit of a good is consumed.
C) the satisfaction from consuming a
good.
D) the practical usefulness of a good
51. The marginal utility from the consumption of
a good is equal to the 57.The above table gives the total utility that Homer
A) total utility divided by the quantity obtains from consuming various quantities of
consumed. chocolate chip cookies. The marginal utility from the
B) total utility divided by the price. third pound of cookies is
C) change in total utility divided by
the change in the quantity consumed. A) 3. B) 4. C) 9. D) 12
D) change in total utility divided by the
change in price. 58) Consumer equilibrium occurs when a consumer
52.Marginal utility measures the
has allocated all available income in the way that,
A) total utility from consumption.
B) additional utility from an additional unit given the prices of goods and services,
of consumption. a) total utility is maximized.
C) average utility from an additional unit b) total utility per dollar is maximized.
of consumption.
c) marginal utility is maximized.
D) additional cost of an additional unit of
consumption. d) marginal utility per dollar is maximized.
53.) Diminishing marginal utility means that 59) Total utility is maximized when a consumer has
A) Ralph will enjoy his second hamburger spent all of his or her income and
less than the first. a) spent equal amounts on all goods.
B) the total utility from one hamburger b) marginal utility is maximized.
exceeds the total utility from two c) the total utility per dollar from all goods is
hamburgers. equal.
C) the price of two hamburgers is d) the marginal utility per dollar from all goods
twice the price of one. is equal.
D) beyond a certain point, total utility
decreases as income rises.
54.According to the principle of diminishing
marginal utility, as the quantity of a good or
service consumed increases, total utility
A) increases.
B) decreases.
C) is unchanging. 60.) Betsy's utility depending from her consumption
D) is zero. of coffee is shown in the table above. If the price of a
55. The principle of diminishing marginal utility cup of coffee is$2, Betsy's marginal utility per dollar
means that as you eat fewer slices of pizza, your from the 2nd cup of coffee per day is
total utility from pizza will ________ and your A) 15
marginal utility from each additional slice of B) 40
pizza will ________. C) 20
A) increase; decrease D) 32.5
B) decrease; increase
C) increase; increase
D) decrease; decrease

56.The above table gives the total utility that Homer

obtains from consuming various quantities of
chocolate chip cookies. The marginal utility from the
fifth pound of cookies is
A) 1.
B) 2.
C) 3.
D) 15.
PREPARED BY:

MR. GIL V. DELA CRUZ, MPA

Instructor

EVALUATED BY: APPROVED BY:

MR. ISRAEL S. MICLAT, MM MRS. AMOR I. BARBA, MM

Program Coordinator, BSE Dean
Answer key

1. B
2. B
3. C
4. C
5. A
6. B
7. C
8. C
9. C
10. B
11. A
12. A
13. C
14. B
15. C
16. C
17. A
18. D
19. A
20. D
21. A
22. A
23. A
24. B
25. D
26. D
27. D
28. E
29. C
30. B
31. A
32. B
33. E
34. D
35. C
36. B
37. D
38. C
39. E
40. E
41. E
42. C
43. A

44-60 no answer