11.

Most severe type of poverty it can be defined

THIRD (3rd CHECKPOINT as the state in which a subject lacks the means to
meet his or her basic needs.
EXAM IN APPLIED
ECONOMICS (SpABMEco) - Absolute poverty
12. Lee Kuan Yew (1923-2015) is an economic
REVIEWER icon was a prime minister of Singapore.
SCOPE: Module 1-3 - Lee Kuan Yew
13. Was a famous 18th-century British economist
Module 1: Introduction to Applied Economics known for the population growth philosophies
Module 2: Basic Economic Problems in The outlined in his 1798 book "An Essay on
the Principle of Population."
Philippines (Socio-economic challenges)
- Thomas Robert Malthus
Module 3: Demand, Supply and Market
14. The market equilibrium for a commodity is
Equilibrium determined by

1. Which of the following explains economics
pertains to the study on how society creates its
material wealth, how it makes this wealth available
to its people with minimum difficulties, and how it
expands its wealth.
- Social science
2. Economics is the study of _______
- people making choices because of the pro
blem of scarcity
3. Scarcity exists __________
- The balancing forces of demand and
supply
15. A fall in the price of the commodity, holding
everything constant, results in and referred to
as
- An increase in the quantity demanded
16. Using the figure below, a decrease in demand
is depicted by a:

- In all countries of the world

4. Microeconomics approaches the study of

- Individual or specific markets

5. This is an analysis of economics which deals
what should be? - Shift from D2 to D1

- Normative economics 17. When an individual’s income falls, while

everything else remains the same, his demand for
a normal good
6. Which of the following decisions must be made
by all economics? - Falls

- What to produce and how much ? How 18. When the price of a substitute of commodity Z
to produce it? For whom to produce? rises, the demand for Z

7. A person who owns the business, responsible - Rises

for the success or future of the business, enjoy all
the business profits and a problem solver. 19. A government subsidy to the producers of a
product:
- Entrepreneur
- Increases product supply
8. Economic system where women tend crops and
raise children while men hunt and plant more
crops. for items 20-21

- Traditional economy
9. Application of economic theory and
econometrics in specific settings with the goal of
analyzing potential
outcomes.

- Economics as an Applied Economics

10. Still a main problem of the Philippine economy
despite improvements reported by the NSO and
NEDA.

- Philippine Unemployment
20. Refer to the above diagram. A price of P60 in
this market will result in:
- a surplus of 100 units
21. Refer to the above diagram. A price of P20 in
this market will result in:
- a shortage of 100 units
22. the desire, willingness, and ability to buy a
good or service
- Demand
23. shows the amount consumers are willing and
able to purchase at each price level for a specified
period of time.
- Demand schedule and curve
24. Other things equal
- Ceteris paribus (latin word)
25. The demand curve illustrates the inverse
(negative) relationship between price and quantity.
- True
26. The downward slope indicates a lower
quantity (horizontal axis) at a higher price (vertical
axis), and a higher quantity at a lower price,
reflecting the law of demand.
- True
27. Common sense, people usually do buy more
of a product at a low price than they do at a high
price.
- True
28. A lower price increases the purchasing power
of money income, enabling the consumer to buy
more at a lower price (or less at a higher price)
without having to reduce consumption of other
goods.
- Income effect
29. A lower price gives an incentive to substitute
the lower-priced good for the now relatively
higher-priced goods.
- Substitution effect
30. Advertising one’s wealth:
- Snob-appeal
31. goods where demand increases as income
increases.
- Normal goods
32. goods where demand decrease as income
increases.
- Inferior goods
33. two goods for which an increase in the price of
one leads to an increase in the demand for the
other.
- Substitute goods
34. Two goods for which an increase in the price
of one leads to a decrease in the demand for the
other.
- Complement goods
35. the more buyers the greater the demand:
- Number of buyers
36. If consumers expect the future price of a
product to be higher, they increase their current
demand for the product.If consumers expect the
future price of a product to be lower, they
decrease their current demand for the product.
a. expect P↑ - current demand ↑
b. expect P↓ - current demand ↓
37. Law of Demand Function:
- Qd = f(P, T, I, R, N, E) or Qd = f (P)
38. Determinants of Demand: Factors That Shift
the Demand Curve:
- Change in buyers’ tastes -T
- Change in the number of buyers - N
- Change in income - I
- Change in the prices of related goods – R
a. Change in Price of Substitute Good
b. Change in Price of Complementary Good
c. Change in consumer price expectations
- Change in consumer price expectations – E
39. refers to movements along a given demand
curve due to a change in price:
- Changes in Quantity Demand
A→B
− increase in Qd
− decrease P
B→A
− decrease in Qd
− increase in P
40. refers to shifts in the demand curve due to a
change in any of the other determinants of
demand.
- Changes in Demand
41. the horizontal summation of all individual
demands for a particular good or service:
- Market Demand
42. refers to the various quantities of a good or
service that producers are willing to sell at all
possible market prices:
- Supply
43. Difference between Individual and Market
supply:
44. Because price and quantity supplied are 57. sometimes called a situation of “excess
directly related, the supply curve graphs as an supply”
___________.
- Surplus
- Upward sloping curve
58. a situation in which quantity demanded is
45. Law of supply states: greater than quantity supplied.

- As price rises …quantity supplied - Shortage

rises, As price falls…quantity supplied
59. 3 Dynamic Laws of Demand and Supply
falls
46. Determinants of Supply: Factors That Shift the 1. If Qd > Qs – shortage - P↑
Supply Curve: If Qd < Qs – surplus - P↓

- Change in resource prices -R 2. The greater the difference between Qd &

- Change in technology - T
- Change in taxes and subsidies - TS
- Change in prices of other goods - O
- Change in producer expectations - E
- Change in the number of suppliers – N
Qs, the greater is the pressure on price to
fall (surplus) or rise (shortage)
3. When Qd=Qs ↔ Equilibrium ↔ no
tendency for price to change

47. Resource prices: 60. Changes in Demand and Equilibrium:

price of labor ↑ D increase: P, Q : Increase in Demand-Price-

price of raw materials↑ production cost ↑supply ↓ increasing effect Quantity-increasing effect

48. Technology: - An increase in demand results in an

produce more, better, faster products at lower cost
efficiency ↑ - production cost ↓ supply ↑
49. Taxes and Subsidies:
increase in price and an increase in
quantity exchanged.
D decrease: P, Q : Decrease in demand- Price-
decreasing effect Quantity-decreasing effect

Tax – expense - production cost ↑supply ↓ - A decrease in demand results in a

Subsidies – grants - production cost ↓ supply ↑ decrease in price and a decrease in the
quantity exchanged.
50. Prices of other goods:

price of other good ↑ - supply of current good ↓

price of other good ↓ - supply of current good ↑

51. Producer Expectation:

expect future price ↑ - current supply ↓

expect future price ↓ - current supply ↑

52. refers to movements along a given supply

curve due to a change in price:

- Changes in Quantity Supply

B→A
− increase in Qs
− increase in P
A→B
− decrease in Qd
− decrease in P
53. refers to shifts in the supply curve due to a
change in any of the other determinants of supply:

- Changes in Supply
54. occurs where the demand curve and supply
curve intersect:

- Market Equilibrium
55. also known as “market-clearing price”

- Equilibrium price (Qd=Qs)

56. where the supply and demand curves intersect
and quantity is determined:

- Equilibrium Quantity (Qd=Qs)