Module 1 c. Whom to produce?
d. What to produce?
Direction: Choose the best letter for each
question.
1. All is true about scarcity, except
a. it is the gap between limited resources and
theoretically limitless wants.
b. it is a basic economic problem
c. the state of being scarce or in short supply
d. it is the state that occurs when society has
adequate resources to meet everyone's needs.
Answer: D
2. What is Managerial Economics?
a. It is the study of economic theories, logic,
concepts, and tools of economic analysis
applies in the process of business decision-
making.
b. It is the study on how goods and services are
produced, traded, and consumed.
c. It is the element influencing the consumer's
choice.
d. It is the amount of products and services that
consumers are willing to buy.
Answer: A
3.) It is the amount of products and services that
are available for the consumers.
a.) Demand
b.) Scarcity
c.) Supply
d.) Economics
Answer: C
4.) The study of economic theories, logic,
concepts, and tools of economic analysis
applied in the process of business decision-
making.
a.) Ceteris Paribus
b.) Managerial economics
c.) Economics
d.) Trade Off
Answer: B
5.) Economic deals with this question except:
a. How to produce?
b. Where to produce?
Answer: B
6.) According to Richard Lipsey “__________ is
the study of the use of scarce resources to
satisfy unlimited human wants.”
a. Managerial Economics
b. Economics
c. Law of Demand
d. Law of Supply
Answer: B
7.) What is the statement that best describes the
law of supply and demand?
a. If price increases, the supply decreases and
the demand increases. If price decreases, the
supply
increases and the demand decreases.
b. If price increases, the supply and the demand
increases. If price decreases, the supply and the
demand decreases.
c. If price increases, the supply increases and
the demand decreases. If price decreases, the
supply
decreases and the demand increases.
d. If price increases, the supply and the demand
decreases. If price decreases, the supply and
the
demand increases.
Answer: C
8.) Which of the following is not a definition of
managerial economics based on the statements
made by the economists?
a. Managerial economics is concerned with the
application of accounting concepts and
economics
to the problem of formulating rational decision-
making.
b. Managerial economics is the integration of
economic theory with business practice for the
purpose
of facilitating decision making and forward
planning by management.
c. Managerial economics applies the principles
and methods of economics to analyze problems
faced
by the management of a business, or other
types of organizations, and to help find solutions 13.) What is the study of economic theories,
that logic, concepts, and tools of economics did
advance the best of such organizations. analysis apply in the process of business
d. Managerial economics is concerned with the decision-making?
application of economic principles and A. Profit Management
methodologies to the decision-making process B. Economics
within the firm or organization. It seeks to C. Economic Efficiency
establish D. Managerial Economics
rules and principles to facilitate the attainment of Answer: D
the desired goal of management.
Answer: A 14.) What is the amount of products and
services that consumers are willing to buy?
9.) “Managerial economics is concerned with A. Demand
the application of economic principles and B. Supply
methodologies to the decision-making process C. Service
within the firm or organization. It seeks to D. Production
establish rules and principles to facilitate the Answer: A
attainment of the desired goal of management.”
Which of the economists below said this 15.) What is a condition in which boundless
definition of Managerial desires outnumber the limited resources
Economics? available to satisfy those desires.
A. Spencer and Seigelman A. Scarcity
B. Davis and Chang B. Supply
C. Douglas C. Demand
D. Mansfield D. None of the above
Answer: C Answer: A

10.) Below are the scopes under Managerial 16.) What is the study of how people and
Economics EXCEPT one. communities use limited resources to meet
A. Demand Analysis and Forecasting boundless goals; scarcity and choice
B. Economic Profit management.
C. Profit Management A. Entrepreneurship
D. Capital Management B. Scarcity
Answer: B C. Economics
D. Service
11.) It is the concept used in explaining the Answer: C
economic model.
a. Ceteris Paribus 17.) It is considered as the main problem of the
b. Market Analysis economy.
c. Theoretical Diagram a. Scarcity
Answer: A b. Debts
c. Globalization
12.) The state of having a short supply. d. Efficiency
a. Demand Answer: A
b. Scarcity
c. Economics 18.) Opportunity costs arise due to
Answer: B a. resource scarcity.
b. lack of alternatives. efficient and effective uses, where waste is
c. limited wants. either eliminated or reduced?
d. abundance of resources. a. Productive Economic
Answer: A b. Economic Growth
c. Economic Efficiency
19.) What is Economics? d. Economic Goodness
A. It is the study of the creation, exchange and Answer: C
consumption of products and services.
B. It is the study of the creation, exchange and
consumption of wants and needs. 24.) What does the Latin phrase “Ceteris
C. It is the study of the creation, exchange and Paribus” mean?
consumption of supply and demand. a. “All else equal”.
D. It is the study of the creation, exchange and b. “To produce one, one must be produced less”
consumption of trade offs and c. “Resources are limited”
opportunity costs. d. “Unlimited wants”
Answer: A Answer: A

20.) What is Inflation? 25.) The following causes the production

A. It is the rate at which cost for goods and possibilities frontier except:
services rise. a. The growing economy
B. It is the rate at which prices for goods and b. Increasing employment rate
services rise. c. Advanced technology
C. It is the rate at which money in terms of d. Changes in resources
purchasing power increases. Answer: B
D. It is the rate at which benefits and costs
decreases. 26.) How is price related to demand?
Answer: B a. Inversely
b. Directly
21.) The main problem of economy and only has c. Directly Proportional
limited supply of human consumption. d. Inversely Proportional
A. Supply Answer: A
B. Demand
C. Scarcity 27.) What is the difference between trade-offs
D. Cost and opportunity cost?
Answer: C A. Trade-offs and opportunity cost is that an
opportunity cost is all the resources that are
22.) The value of the next best alternative that lost when a consumer makes a choice. While a
had to be given up doing the action that was trade-off is the most desirable
chosen is the? opportunity given up when a consumer makes a
A. Sale Price choice.
B. Trade-Off B. Trade-offs and opportunity cost is that a
C. Opportunity Cost trade-off is all the resources that are lost when
D. Capital a
Answer: C consumer makes a choice. An opportunity cost
is the most desirable opportunity given
23.) What is achieved when all goods and up when a consumer makes a choice.
production inputs are distributed to their mos C. Trade-offs and opportunity cost is that a
trade-off is all the resources that are found
when a consumer makes a choice. An Answer: C
opportunity cost is the most desirable
opportunity 33.) What do you call when all goods and
taken up when a producer makes a choice. production inputs are distributed to their most
D. Trade-offs and opportunity cost is that an efficient and effective uses, and waste is either
opportunity cost is all the resources that are eliminated or reduced.
found when a consumer makes a choice. While A. Economics
a trade-off is the most desirable B. Ceteris Paribus
opportunity taken up when a producer makes a C. Economic Efficiency
choice. D. Managerial Economics
Answer: B Answer: C

28.) All of the following are considered as the 34.) What does Managerial economics studies?
key concepts of economics EXCEPT: A. Economic Theories
A. Scarcity B. Economic Concepts
B. Price C. Economic logics
C. Supply D. All of the above
D. Demand Answer: D
Answer: B
35.) What refers to the amount of products and
29.) This is the amount of products and services services that consumers are willing to buy?
that are available for the consumers a. Scarcity
a) Demand b. Supply
b) Scarcity c. Demand
c) Supply d. Incentives
d) Incentives Answer: C
Answer: C
36.) Which law has a direct relationship with the
30.) Which of the following does not belong to price, specifically, if the prices increases, it will
the scopes under Managerial also increase, and vice versa?
Economics? a. Law of Supply
a) Capital Management b. Law of Demand
b) Demand Analysis and Forecasting c. Law of Supply and Demand
c) Profit Management d. None of the above
d) Opportunity Cost Answer: A
Answer: D
37.) The following are key concepts in
31.) If the price increases the supply will? economics EXCEPT for
a.) decrease a. Scarcity44
b.) increase b. Security
c.) not change c. Demand
Answer: B d. Supply
Answer: B
32.) The lack of availability of supplies is called?
a.) economics 38.) A Latin phrase that means “all else equal”.
b.) trade off a. Veni, vidi, vici.
c.) scarcity b. In vino veritas
d.) production c. Carpe diem
d. Ceteris Paribus C. Demand Analysis and Forecasting
Answer: D D. Economics
Answer: D
39.) The limited supply of human consumption.
a. Supply 45.) It is the amount of products and services
b. Scarcity that consumers are willing to buy.
c. Demand a. scarcity
Answer: B b. supply
c. demand
40.) Below are the scopes under Managerial d. inflation
Economics EXCEPT one. Answer: C
a. Economic Profit
b. Demand Analysis and Forecasting 46.) It is the rate at which prices for goods and
c. Profit Management services rise.
Answer: A a. scarcity
b. supply
41.) Which of the following is not a part of c. demand
problem-solving principles? d. inflation
a. Focus on the reasons for solving the problem Answer: D
b. Learn to work with minimal information
c. Each problem should be seen as common 47.) This is the concept of putting other
problem unnecessary factors in a state of pause by
d. Incorporate the timeline principle assuming they remain constant temporarily.
Answer: C This is a Latin phrase that means “all else being
equal”
42.) Which statement is not true about Ceteris a. Mutatis mutandis
Paribus? b. Ceteris Paribus
a. An assumption to find out the causal c. Ad hoc
relationship of two variables. d. Per caput
b. Used to isolate the variables to be used in the Answer: B
model.
c. Used to focus on the effect of one variable on 48.) The main concept of economics where
another. resources are assumed to be
d. A Greek phrase that means “all else equal” limited.
Answer: D a. Surplus
b. Scalability
43.) The amount of products and services that c. Scarcity
consumers are willing to buy. d. Supply
A. Supply Answer: C
B. Law of Demand
C. Demand 49.) The study of the creation, exchange and
D. Law of supply consumption of products and services?
Answer: C a. Managerial economics
b. Economics
44.) What is the study of the creation, exchange, c. Economic Model
and consumption of products and services. Answer: B
A. Law of Supply
B. Managerial Economics
50.) A latin phrase that means “all else equal”
a.) Ceteris Paribus 56.) The following are problem-solving
b.) oikonomia principles except for?
c.) trade-offs a. Incorporate the timeline principle
Answer: A b. Each problem should be seen as unique
c. View the problem from a systems approach
51.) The rate at which prices for goods and d. Don’t work with minimal information
services rise. Answer: D
A. Incentives
B. Supply
C. Inflation 57.) According to Mankiw, what is he referring to
D. Demand when he says, like a household set-up, that
Answer: C everyone has a role to play?
A. Scarcity
52.) What are the Three Scopes under B. Demand
Managerial Economics? C. Supply
A. Supply Management, Demand Management D. Economics
and Capital management. Answer: D
B. Capital Management, Profit Management
and Cost Management. 58.) This is a production of a goods to be able to
C. Trade-offs Analysis and Forecasting, Profit be used by the consumers.
Management and Capital Management A. Supply
D. Demand Analysis and Forecasting, Profit B. Economics
Management and Capital Management. C. Scarcity
Answer: D D. Demand
Answer: A
53.) Ignored opportunity by choosing one
alternative over another. 59.) What is the Latin phrase that means “all
a. Sunk-cost Fallacy else equal”?
b. Hidden-cost Fallacy A. Economic Model
c. Cost Curve B. Ceteris Paribus
Answer: B C. Inflation
D. Scarcity
54.) Irrelevant costs that are already incurred Answer: B
but can’t be recovered or taken back.
a. Sunk-cost Fallacy 60.) Which of the following is the correct
b. Hidden-cost Fallacy statement about the Law of Supply and
c. Cost Curve Demand?
Answer: A A. When the price increases, the supplies
decreases and the demand also
55.) What is one of the key concepts of decreases
economics that means the resources are limited B. When the price decreases, the supplies
while the wants and needs are unlimited? increases and the demand also
a. Supply increases
b. Demand C. When the price increases, the demand is
c. Scarcity increases and demand is also
d. Inflation increases
Answer: C
D. When the prices increase the supply also Answer: A
increases but the demand decreases,
while when the price decreases the supply also 66.) Which best describes scarcity?
decreases and demand A. a situation where unlimited wants exceed
increases. limited resources
Answer: D B. wanted goods are not obtained due to lack of
funds
61.) The following items (accountant's C. continuous increase of supplies
computer, carpenter's drill, and a tailor's sewing D. increasing demand
machine) are Answer: A
all examples of which factor of production?
a. Entrepreneurship 67.) What will happen to the price if the demand
b. Land is significantly high while supply is low?
c. Capital A. nothing
d. Labor B. decrease
Answer: C C. increase
D. none of the above
62.) The fact that there are limited amounts of Answer: C
goods and services to meet unlimited wants is
called? 68.) Something essential for survival, such as
a. Scarcity air, food, or shelter; eg. water consumption or
b. Opportunity Cost "basic" medical care. These commodities are
c. Trade Off called?
d. Shortages A. Needs
Answer: A B. Wants
63.) It is achieved when all goods and C. Goods
production inputs are distributed to their most D. Basic Commodities
efficient Answer: A
and effective uses, and waste is either
eliminated or reduced. 69.) The absence of a good or service; unlike
A. Inflation scarcity, this can last for a short while or a
B. Opportunity cost long time, it refers to?
C. Economic Efficiency A. Scarcity
Answer: C B. Shortage
C. Inflation
64.) A Latin phrase that means "all else equal". D. Demand
A. Production Possibilities Frontier (PPF) Answer: B
B. Ceteris Paribus
C. Economics 70.) What is Ceteris Paribus?
Answer: B a. All else equal
b. All else is not equal
65.) The study of economic theories, logic c. making necessary alterations while not
concepts, and tools of economic analysis affecting the main point at issue.
applied d. interact with one another as a variable of
in the process of business decision-making. interest affects an outcome of interest.
A. Managerial Economics Answer: A
B. Business Economics
C. Financial Economics
71.) The rate which prices for goods and 76.). What is the most important factor of
services rise. Managerial Economics?
a. Supply a) Economics
b. Demand b) Ceteris Paribus
c. Scarcity c) Decision-Making
d. Inflation d) Inflation
Answer: D Answer: C

72.) _______ is the study of economic theories, 78.). ___________ is achieved when all goods
logics, concepts, and tools of economic analysis and production inputs are distributed to their
applied in the process of business decision- most
making. efficient and effective uses, and waste is either
A. Economic Model eliminated or reduced.
B. Law of Supply & Demand a) Tradeoff and Opportunity Cost
C. Economics b) Economic Efficiency
D. Managerial Economics c) Law of Supply and Demand
Answer: D d) Incentives
Answer: B
73.) _______ is an economic model used by
managers as a decision-making tool for 79.) What is the main economic problem?
optimal product mix, also known as the A. Scarcity
Production Possibility Curve. B. Scalability
A. Ceteris Paribus C. Inflation
B. Production Possibilities Frontier D. Incentives
C. Managerial Economics Answer: A
D. Law of Supply & Demand
Answer: B 80.) These are the three scopes under
managerial economics. EXCEPT.
74.). It refers to a resource's limited supply vs A. Demand Analysis and Forecasting
the unlimited wants. Any natural resource or a B. Capital Management
limited supply of a particular commodity may be C. Profit Management
considered. D. Trade-Offs
A. Scarcity Answer: D
B. Inflation
C. Economic 81.) What is not the meaning of Ceteris Paribus?
D. Supply a. Everything is equal
Answer: A b. All else is not equal
c. Holding other things constant
75.). It signifies a high level of social benefit and d. Other conditions remaining the same
cheap production costs. Additionally, Answer: B
businesses can achieve by reducing waste
during the production and distribution of 82.) The amount of products and services that
commodities. are available for the consumer.
A. Demand a. Scarcity
B. Inflation Rate b. Demand
C. Economic efficiency c. Supply
D. Deflation d. Inflation
Answer: C Answer: C
 Answer: A
83.) What is the important factor of Managerial
Economics? 89). A. Economics comes from a latin word
a. Reliable “oikonomia”
b. Decision-Making B. Oikonomia means Oikos (household) and
c. Measurable Nomos (management)
d. Time Bound a. Both statements are correct.
Answer: B b. Statement A is incorrect, while statement B is
correct.
84.) Who is the economist that defines c. Statement A is correct, while statement B is
managerial economics as concerned incorrect.
with the application of economic concepts and d. Both statements are incorrect.
economics to the problem Answer: B
of formulating rational decision-making?
a. Mansfield 90.) A. Scarcity is the limited supply of human
b. Spencer and Seigelman consumption
c. Davis and Chang B. Demand is the amount of products and
d. Douglas services that are available for the consumers.
Answer: D a. Both statements are correct.
b. Statement A is incorrect, while statement B is
85.) What does “Ceteris Paribus” mean? correct.
A: All else equal c. Statement A is correct, while statement B is
B: Everybody is unequal incorrect.
C: Nothing is equal d. Both statements are incorrect.
D: Something is equal Answer: C
Answer: A
91.) What is the factor that influences the
86.) What is the rate of the rise of the prices of decision of the consumer?
goods/services? A. Opportunity cost
A: Astronomic rise B. Incentives
B: Inflation C. Demand
C: Deflation D. Trade-offs
D: Demand Answer: B
Answer: B
92.) It is the study of economic theories, logic,
87.) Number of products and services that concepts, and tools of economic analysis
consumers are willing to buy. applied in the process of business decision-
a. Supply making.
b. Economics A. Economics
c. Demand B. Scarcity
d. Scarce Resources C. Ceteris Paribus
Answer: C D. Managerial Economics
Answer: D
88.) Limited nature of society's resources.
a. Scarce Resources 93.) What is Inflation?
b. Managerial Economics A. It is the rate at which cost for goods and
c. Economics services rise.
d. Resources
B. It is the rate at which money in terms of 5. It is the process used to measure the
purchasing power increases. benefits of a decision or taking action minus
C. It is the rate at which benefits, and costs the costs associated with taking that action.
decreases. a. Cost Benefit Decision
D. It is the rate at which prices for goods and b. Managerial Economics
services rise. c. Sunk-Cost Fallacy
Answer: D d. Hidden-Cost Fallacy
Answer: A
Module 2
6. Refers to the money that a person has left
over after they subtract out their consumer
Direction: Choose the best letter for each spending from their disposable income over a
question. given time period.
a. Investment
1. is used to evaluate a business' performance b. Savings
and evaluate how it stacks c. Decision-making
up against rivals' financial positions. d. Discounting
a. Profit Margin Answer: B
b. Economic Profit
c. Accounting Profit 7. A well planned action that allocates financial
d. Income Statement resources to obtain the highest possible
Answer: C return.
a. Investment Decision
2. It is a well-thought-out move that allocates b. Marginal Benefit
money in order to get the highest return. c. Compounding
a. Decision Making d. Discounting
b. Investment Decision Answer: A
c. Extend Decision
d. Fallacy 8. The process of identifying the current value
Answer: B of a future payment or cash flows.
a. Investment Decision
3. The cost varies on the level of output. b. Marginal Benefit
a.) Opportunity cost c. Compounding
b.) Total Cost d. Discounting
c.) Variable cost Answer: D
d.) Fixed Cost 9. What is the formula for average cost?
Answer: C a. Total cost of production divided by change in
production quantity
4. It is the ignored opportunity by choosing one b. Change in total cost divided by change in
alternative over another. production quantity
a.) Hidden-Cost Fallacy c. Change in total cost divided by number of
b.) Composition Fallacy units produced
c.) Fallacy d. Total cost of production divided by number
d.) Sunk-Cost Fallacy of units produced
Answer: A Answer: D
10. Russell wanted to determine the closest B. Fixed Costs ÷ (Revenue – Variable Cost per
future value of his P20,000 investment with a Unit)
5% compound interest rate on the year that his C. PV = FV / 〖(1+ r)〗^k
money will double. D. Total Cost of Production/Number of Units
a. P40,379 Produced
b. P39,987 Answer: B
c. P40,000
d. P39,986 16. How to Calculate the Marginal Cost:
Answer: B A. PV = FV / 〖(1+ r)〗^k
B. Total Cost of Production/Number of Units
11. It is the difference in total production costs Produced
caused by creating or producing one C. Change in Total Cost/Change in Production
more unit. (Answer: A. Marginal Cost) Quantity
A. Marginal Cost D. Fixed Costs ÷ (Revenue – Variable Cost per
B. Fixed Cost Unit)
C. Average Cost Answer: C
D. Total Cost
Answer: A 17. What is the formula for marginal cost and
average cost?
12. It is a well-planned action that allocates A. change in total cost/ change in total product
financial resources to obtain the highest and total cost/ total product
possible return. The decision is made based on B. Change in total product/ change in total cost
investment objectives, risk appetites, and total product/ total cost
and the nature of the investor. (Answer: D. C. Fix cost + variables cost
Investment Decision) D. none of the above
A. Decision-making Answer: A
B. Shutdown Decision
C. Extent Decision 18. How to get the total cost?
D. Investment Decision A. Plus the variable cost and marginal cost
Answer: D B. Minus the variable cost and marginal cost
13. A form of cost that is affected by the output C. Plus the variable cost and fixed cost
of the business D. Minus the variable cost and fixed cost
a. Fixed cost Answer: C
b. Total cost
c. Variable cost 19. A company's decision to close should not
Answer: C be considered in the short term.
a. avoidable costs.
14. It is a form of fallacy in which takes account b. variable costs.
all the resources spent in creation of a c. fixed costs.
business ventures. d. MCs.
a. Sunk cost fallacy Answer: C
b. Fallacy
c. Hidden cost fallacy 20. Which of the following will increase the
Answer: A break-even quantity?
a. A decrease in overall fixed costs
15. How to calculate Break-Even Points: b. A decrease in the marginal costs
A. Change in Total Cost/Change in Production c. A decrease in the price level
Quantity d. An increase in price level
Answer: C b. Sunk-Cost Fallacy d. High-Risk Fallacy
Answer: B
21. What is Sunk Cost?
A. It refers to implicit costs that are already 26. Which of the following is not true?
rendered but can’t be recovered. a. In marginal analysis, average and marginal
B. It refers to explicit costs that are made but costs must be mixed up.
can be recovered. b. If MB is greater than MC take an investment
C. It refers to irrelevant costs that are already and if MC is greater than MB the profit's
incurred but can’t be recovered. is decreasing.
D. refers to relevant costs that are already c. accounting profit does not necessarily
incurred and can be recovered. correspond to economic profit.
Answer: C d. Sunk-cost fallacy means that you consider
irrelevant costs.
22. What is a Fallacy? Answer: A
A. It is the use of invalid or otherwise faulty 27. I.C. Company’s net income equals to
reasoning. P4,000,000 at the end of the year. Many
B. It is the use of valid or otherwise logical investors came to show their interest in
reasoning. investing. The total additional investment
C. It is the use of invalid or otherwise logical received amounts to P2,500,000 where
reasoning. investors expect a 10% annual return. What is
D. It is the use of valid or otherwise faulty the Accounting Profit of the business?
reasoning. a. 2,500,000
Answer: A b. 4,000,000
c. 250,000
23. It is a cost that has already been incurred d. 3,750,000
and cannot be recovered. Answer: B
A. Prospective Cost
B. Sunk Cost 28. A clothing company that produces 500
C. Relevant Cost shirts a month has a fixed cost of P25,000.
Answer: B Find
the company’s variable cost if they have a total
24. Which of the following is true regarding cost of P275,000.
fixed costs? a. 275,000
A. A fixed cost remains unchanged in amount b. 200,000
even when the volume of activity c. 300,000
varies from period to period. d. 250,000
B. On a per-unit basis, fixed costs have an Answer: D
inverse relationship.
C. Fixed costs are used in calculating the 29. It is the systematic approach to estimating
break-even point. the strengths and weaknesses of
D. All the above. alternatives.
Answer: D a) Cost-Benefit Analysis
b) Cost Curve
25. What pertains to our tendency to follow c) Marginal Analysis
through on an endeavor if time, effort, or d) Break-Even Analysis
money were already invested into it. whether Answer: A
the current costs outweigh the benefits?
a. Hidden-Cost Fallacy c. High-Benefit Fallacy
30. This rule enables the investors to C. Cost-Benefit Analysis
determine if an investment is profitable. D. Income Statement
a) Rule 72 Answer: C
b) Net Present Value Rule
c) Net Profit Value Rule 36. It is the ignored opportunity by choosing
d) none of the above one alternative over another.
Answer: B A. Sunk-Cost Fallacy
B. Average Cost
31. It is the process of Identifying the current C. Marginal Cost
value of a future payment or cash flows. D. Hidden-Cost Fallacy
A. Discounting Answer: D
B. Marginal Analysis
C. Economic Profit 37. It is a cost that does not change with an
D. Accounting Profit increase and decrease in the number of
Answer: A goods and services produced.
a. Variable cost
32. What is a well-planned action that allocates b. Fixed cost
financial resources to obtain higher c. Cost curve
returns? d. Total cost
a. Break-even Answer: B
b. Investments
c. Shutdown Decisions 38. An economic profit is the difference
d. Accounting Profit between the revenue received from the sale of
Answer: B an output and the costs of all inputs used,
DOES NOT include implicit costs.
33. This rule enables the investors to a. TRUE
determine if an investment is profitable. b. FALSE
a. Net Present Value Rule c. Maybe
b. Net Future Value Rule d. None of the above
c. Rule of 72 Answer: B
d. Compounding
Answer: A 39. It is a decision regarding how much or how
many products to produce.
34. The amount of money for which a product a. Investment Decision
or service must be sold to cover the cost of b. Economic Decision
manufacturing or providing it. c. Extent Decision
a. Cost price d. Accounting Decision
b. Profit Answer: C
c. Net sales
d. Break-even price 40. It is the difference between the revenue
Answer: D received from the sale of an output and the
costs of all inputs used, as well as any implicit
35. It is a systematic approach in estimating costs.
the strengths and weaknesses of alternatives. a. Gross Profit
It b. Economic Profit
is sometimes called benefit-cost decisions. c. Accounting Profit
A. Cost Curve d. Net Profit
B. Accounting Profit Answer: B
 46. It is the ignored opportunity by choosing
41. Also referred to as financial profit or one alternative over another.
bookkeeping profit that is a company’s net A. Hidden-Cost Fallacy
income, B. Sunk-Cost
or total revenue minus explicit costs. C. Fallacy
A. Accounting Profit D. Sunk-Cost Fallacy
B. Economic Profit Answer: A
C. Gross Profit
D. None of the Above 47. It is the process of identifying the current
Answer: A value of a future payment or cash flows.
A. Compounding
42. It varies the level of output from the B. Marginal cost
business. The more product the business C. Investment
made, the higher the D. Discounting
cost. Answer: D
a. fixed cost
b. variable cost 48. What is the other term of accounting profit?
c. total cost A. Fixed-cost fallacy
d. accounting profit B. Bookkeeping profit
Answer: B C. Implicit costs
D. Explicit costs
43. It is the sum of the total variable and the Answer: B
total fixed cost.
a. fixed cost 49. It is about the gap between the proceeds
b. variable cost from the sale of an output and the total cost of
c. total cost all
d. accounting profit used inputs.
Answer: C A. Economic profits
B. Sunk-cost
44. The concept where the benefits must C. Fallacy
outweigh the cost of something when D. Cost benefit
making a decision. Answer: A
a. Sunk-cost
b. Hidden-cost 50. Which of the following describe the
c. Fixed cost Variable cost?
d. Cost-benefit A. It varies with the level of output from the
Answer: D business.
B. It is a cost that does not change with an
45. The concept where the decision-maker is increase and decrease in the number of
too focused and blinded by a goods and services produced.
past investment when making a decision. C. It is the sum of the total variable cost and
a. Sunk-cost fixed cost.
b. Hidden-cost D. It is a systematic approach to estimating the
c. Fixed cost strengths and weaknesses of
d. Cost-benefit alternatives.
Answer: A Answer: A

51. What is the formula to get an average cost?

A. Change in total cost over change in Answer: C
production quantity = average cost
B. Total variable cost + total fixed cost = 57. _______ is a cost that varies with the level
average cost of output from the business. The more
C. Total Cost of Production over Number of product the business made, the higher the cost
units produced = average cost A. Variable Cost
D. Fixes Cost + (Revenue per unit - Variable B. Fixed Cost
cost per Unit) = average cost C. Total Cost
Answer: C Answer: C

52. A profit is a difference between the revenue 58. _______ is also referred to as financial
received from the sale of an output and the profit or bookkeeping profit, is a company’s
costs net income, or total revenue minus explicit
of all inputs used, as well as any implicit costs. costs.
A. Economic Profit A. Economic Profit
B. Financial Profit B. Balance Profit
C. Accounting Profit C. Accounting Profit
Answer: A Answer: A

53. It is the process of identifying the current 59. It is a process a manager or owner do to
value of a future payment or cash flow. maintain the business’s success.
A. Compounding A. Accounting Profit
B. Investment Decision B. Decision Making
C. Discounting C. Extent Decision
Answer: C D. Marginal Cost
Answer: B
54. What is needed to subtract with net income
in order to obtain economic profit? 60. It is the cost does not change with the
A. explicit costs increase and decrease of the number of goods
B. implicit costs a. Fixed cost
C. revenue b. Variable cost
D. retained assets c. Changing cost
Answer: B d. Total cost
Answer: A
55. It is a systematic approach to estimating
the strengths and weaknesses of alternatives. 61. It is the use of invalid or otherwise faulty
a. COST-BENEFIT ANALYSIS reasoning or wrong moves.
b. HIDDEN COST FALLACY a. Sunk cost
c. SUNK-COST b. Sunk cost fallacy
d. TOTAL COST c. Fallacy
Answer: A Answer: C

56. Irrelevant costs that are already incurred 62. It is the sum of the Total Variable Cost and
but can’t be recovered or taken back. the Total Fixed Cost.
A. COST-BENEFIT ANALYSIS a. Total Cost
B. HIDDEN COST FALLACY b. Variable Cost
C. SUNK-COST c. Opportunity Cost
D. TOTAL COST d. Fixed Cost
Answer: A The formula used for Compounding is FV = PV
* (1 + R) .k
63. What is CBA? a. Both statements are correct.
A: Change-Benefit Audit b. Statement A is incorrect, while statement B
B: Cost-Blockage Analysis is correct.
C: Cost-Benefit Analysis c. Statement A is correct, while statement B is
D: Cost-Benefit Audit incorrect.
Answer: C d. Both statements are incorrect.
Answer: A
64. NPV means?
a. Natural Property Value 69. What is Fallacy?
b. Net Present Value A. It is the use of valid or otherwise faulty
c. Net Past Value reasoning.
d. Net Past Volume B. It is the use of valid or otherwise faulty
Answer: B reasoning.
C. It is the use of invalid or otherwise faulty
65. It is the difference in total production costs reasoning.
caused by creating or producing one more unit. D. It is the use of valid or otherwise logical
a. Marginal Cost reasoning.
b. Average Cost Answer: C
c. Marginal Case
d. Average Case 70. It is a decision regarding how much or how
Answer: A many of a product to produce.
A. Investment Decision
66. It is a decision regarding how much or how B. Extent Decision
many of a product to produce. C. Accounting Decision
A. Investment Decision D. Economic Decision
B. Economic Decision Answer: B
C. Extent Decision
D. Accounting Decision
Answer: C

67. A. Fallacy is the irrelevant costs that are

already incurred but can’t be recovered or
taken back.
B. Sunk-Cost Is the use of invalid or otherwise
faulty reasoning, or “wrong moves.”
a. Both statements are correct.
b. Statement A is incorrect, while statement B
is correct.
c. Statement A is correct, while statement B is
incorrect.
d. Both statements are incorrect.
Answer: D

68. The formula used for Discounting is PV =

FV/(1 + R) .k