NAME______________________________ ECONOMICS FINAL

DATE___________________

DIRECTIONS: Circle the letter of the MOST CORRECT response 1) Opportunity cost is a. always paid with money b. always paid at a bank c. always given to someone you owe a debt to d. always something you have to give up to get what you want 2) Economics is the study of a. choices b. personality c. the brain d. money 3) Because of ________ there are not enough resources for everybody a. thieves b. capitalism c. economics d. scarcity 4) A country can either produce 100 cars OR 300 guns with its limited resources, but it cannot do both at the same time. What is the total opportunity cost if the country decides to produce the 100 cars? a. 100 guns b. 200 guns c. 300 guns d. 400 guns 5) A country is producing 10 cars and 35 guns. It starts a war with another country and decides to produce 10 more guns. In order to do that, it has to lower the amount of cars it produces to 8 cars. What is the opportunity cost of producing the 10 new guns? a. 2 cars b. 8 cars c. 10 cars d. 35 cars

6) Rational people will choose to do or buy something if a. MB > MC b. MB < MC 7) Someones comparative advantage is an activity that a. he/she performs more efficiently than someone else b. he/she does the most efficiently c. is the easiest for him/her to do d. he/she does the most frequently 8) How would an increase in the cost of cotton affect the market for socks? a. Increase in demand for socks b. Decrease in demand for socks c. Increase in supply of socks d. Decrease in supply of socks 9) How would an increase in the price of Jollibee affect the market for KFC? a. Increase in demand for KFC b. Decrease in demand for KFC c. Increase in supply of KFC d. Decrease in supply of KFC 10) How would an increase in the population of babies affect the market for baby milk? a. Increase in demand for baby milk b. Decrease in demand for baby milk c. Increase in supply of baby milk d. Decrease in supply of baby milk 11) How would an increase in the population of babies affect the market for baby milk? a. Increase in demand for baby milk b. Decrease in demand for baby milk c. Increase in supply of baby milk d. Decrease in supply of baby milk 12) A high price elasticity coefficient signifies that the product being analyzed is a. Elastic, meaning that it is very responsive to a change in price b. Elastic, meaning that it is not very responsive to a change in price c. Inelastic, meaning that it is very responsive to a change in price d. Inelastic, meaning that it is not very responsive to a change in price

13) The allowance of all students is increased from P700 to P900. The following week, sales of rice in the canteen decrease from 525 cups to 475 cups. What is the income elasticity of demand for rice? a. +0.4 b. -0.4 c. +0.8 d. -0.8 14) What does the income elasticity of rice from the previous question signify? a. elastic, normal b. elastic, inferior c. inelastic, normal d. inelastic, inferior 15) The income of the people in a town decreased from P11000 to P9000. The following week, sales of gasoline decrease from 20500 liters to 19500 liters. What is the income elasticity of demand for gas? a. +2.5 b. -2.5 c. +0.25 d. -0.25 16) What does the income elasticity of gasoline from the previous question signify? a. elastic, normal b. elastic, inferior c. inelastic, normal d. inelastic, inferior 17) The price of burgers has increased from P35 to P45. Afterwards, the sales of French fries drop from 275 to 225. What is the cross elasticity of demand for French fries? a. +1.2 b. -1.2 c. +0.8 d. -0.8 18) What does the cross elasticity of French fries from the previous question signify? a. elastic, complements b. inelastic, complements c. elastic, substitutes d. inelastic, substitutes

19) The price of satellite television services has decreased from P330 to P270. Afterwards, the sales of televisions increase from 765 to 835 units. What is the cross elasticity of demand for French fries? a. +0.5 b. -0.5 c. +1.0 d. -1.0 20) What does the cross elasticity of televisions from the previous question signify? a. elastic, complements b. inelastic, complements c. elastic, substitutes d. inelastic, substitutes 21) Pick any WHOLE number between 1 and 100 (ie. 1, 2, 3,...98,99,100) and write it in the box below. I will find the average number chosen by the class. The person (or people) who write down the number closest to two-thirds (2/3) of the average will be given the point for this question. Here is an example: 3 students are playing this game. Player 1 chooses 25, player 2 chooses 5, and player 3 chooses 60. The average of those numbers is 30, two thirds of that is 20, so the player 1 is the winner and gets the point. THINK ABOUT THE GAME, THE PLAYERS, AND THE STRATEGIES, AND CHOOSE THE BEST STRATEGY.