Cagayan State University

College of Business, Entrepreneurship & Accountancy

Microeconomic Theory & Practice-Mid Terms Examination

Use a separate answer sheet which should contain your name, course, section and the answers
to this examination. Submit the answer sheet/s only to my email address. mstanjr@csu.edu.ph.

Test I. True or False

1. Land as a production factor pertains only to the soil where you can locate your business.

2. Production factors may be enhanced.

3. In economics, capital means money used for business.

4. Economics is a field of study that provides knowledge how to acquire all our needs and wants.

5. The entrepreneur may not necessarily be the manager of a business.

6. International economics studies the functioning of the national economy.

7. Economics falls under the field of natural sciences.

8. Payment for the entrepreneur is called salaries or wages.

9. Microeconomics is the smallest level of economic analysis.

10. A market necessitates a physical place of exchange.

11. Barter is the value of a good in terms of money.

12. Aggregate demand is a reflection of a consumer’s desire for a commodity.

13. Shortage represents the intersection between demand and supply.

14. A movement within the same demand or supply curve is mainly caused by changes in prices.

15. A shift of the demand curve to the left or right is normally caused by non-price factors.

16. Surplus represents the excess of supply over demand for a good.

17. In a market economy, the government sets the prices of commodities.

18. Shortage represents are area where demand is equivalent to supply.

19. Free goods can become economic goods.

20. Aggregate supply represents the amount of commodity a producer is willing to sell in the
market.

II. Graphing Exercise. Plot the following demand and supply schedule in a graph showing the
following:

a. Demand curve
b. Supply curve
c. Equilibrium point
d. Area of shortage
e. Area of surplus

Demand Schedule for Pork Daily

Price per Kg Quantity Demanded

(in PhP) (# kgs.)
150 550
180 310
210 210
240 170
270 90

III. Essay. Answer the following questions briefly but adequately.

1. Elaborate on the similarities and differences between economic theories and price theory. Cite
an example of each one.

2. Explain the principle of the invisible hand and how it relates to the process of price setting in a
market.

3. Elaborate how non-price factors affect the demand or supply level of a commodity.

4. Under what circumstances would a government engage in price setting? Explain why.