SSS ONE 3RD TERM ECONOMICS EXAMINATION

1. The law of demand states that:

- a) As price increases, quantity demanded increases.
- b) As price decreases, quantity demanded increases.
- c) As price increases, quantity demanded stays the same.
- d) None of the above.

2. The law of supply states that:

- a) As price increases, quantity supplied increases.
- b) As price decreases, quantity supplied increases.
- c) As price increases, quantity supplied stays the same.
- d) None of the above.

3. Which of the following factors does NOT affect demand?

- a) Consumer income
- b) Technology
- c) Tastes and preferences
- d) Prices of related goods

4. Which of the following factors does NOT affect supply?

- a) Production costs
- b) Consumer income
- c) Technology
- d) Government regulation

5. Market equilibrium is achieved when:

- a) Demand is greater than supply.
- b) Supply is greater than demand.
- c) Quantity demanded equals quantity supplied.
- d) Price is at its highest level.

6. A demand curve generally slopes:

- a) Upward from left to right.
- b) Downward from left to right.
- c) Horizontally.
- d) Vertically.

7. A supply curve generally slopes:

- a) Upward from left to right.
- b) Downward from left to right.
- c) Horizontally.
- d) Vertically.
8. If the price of a substitute good increases, the demand for the original good:
- a) Increases
- b) Decreases
- c) Stays the same
- d) Becomes perfectly elastic

9. If the price of a complementary good increases, the demand for the original good:
- a) Increases
- b) Decreases
- c) Stays the same
- d) Becomes perfectly inelastic

10. A shift to the right of the demand curve indicates:

- a) An increase in demand.
- b) A decrease in demand.
- c) An increase in quantity demanded.
- d) A decrease in quantity demanded.

11. A shift to the right of the supply curve indicates:

- a) An increase in supply.
- b) A decrease in supply.
- c) An increase in quantity supplied.
- d) A decrease in quantity supplied.

12. Price elasticity of demand measures:

- a) The responsiveness of quantity demanded to a change in price.
- b) The responsiveness of quantity supplied to a change in price.
- c) The responsiveness of demand to a change in income.
- d) The responsiveness of supply to a change in income.

13. When demand is perfectly inelastic, the demand curve is:

- a) Vertical
- b) Horizontal
- c) Upward sloping
- d) Downward sloping

14. When supply is perfectly elastic, the supply curve is:

- a) Vertical
- b) Horizontal
- c) Upward sloping
- d) Downward sloping

15. A good is considered inferior if:

 - a) Demand decreases as income increases.
- b) Demand increases as income increases.
- c) Demand remains constant regardless of income changes.
- d) Supply decreases as income increases.

16. A good is considered normal if:

- a) Demand decreases as income increases.
- b) Demand increases as income increases.
- c) Demand remains constant regardless of income changes.
- d) Supply decreases as income increases.

17. If a government imposes a price ceiling below the equilibrium price:

- a) There will be a surplus.
- b) There will be a shortage.
- c) The market will remain in equilibrium.
- d) Demand will equal supply.

18. If a government imposes a price floor above the equilibrium price:

- a) There will be a surplus.
- b) There will be a shortage.
- c) The market will remain in equilibrium.
- d) Demand will equal supply.

19. An increase in consumer income generally leads to:

- a) An increase in demand for normal goods.
- b) A decrease in demand for normal goods.
- c) No change in demand for normal goods.
- d) An increase in supply of normal goods.

20. Technological advancement in production typically:

- a) Increases supply.
- b) Decreases supply.
- c) Has no effect on supply.
- d) Decreases demand.

21. An excess supply in the market is also known as:

- a) Surplus
- b) Shortage
- c) Equilibrium
- d) Deficit

22. An excess demand in the market is also known as:

- a) Surplus
- b) Shortage
 - c) Equilibrium
- d) Surplus

23. Which of the following is likely to happen if there is a natural disaster affecting production?
- a) Supply decreases
- b) Supply increases
- c) Demand increases
- d) Demand decreases

24. A subsidy given to producers generally:

- a) Increases supply.
- b) Decreases supply.
- c) Increases demand.
- d) Decreases demand.

25. A tax imposed on producers generally:

- a) Decreases supply.
- b) Increases supply.
- c) Decreases demand.
- d) Increases demand.

26. Which of the following is NOT a determinant of demand?

- a) Consumer preferences
- b) Number of sellers
- c) Prices of related goods
- d) Consumer income

27. Which of the following is NOT a determinant of supply?

- a) Technology
- b) Cost of production
- c) Consumer tastes
- d) Number of sellers

28. When the price of a good rises, the quantity supplied:

- a) Increases
- b) Decreases
- c) Stays the same
- d) Becomes perfectly elastic

29. When the price of a good falls, the quantity demanded:

- a) Increases
- b) Decreases
- c) Stays the same
- d) Becomes perfectly inelastic
30. A market is in equilibrium when:
- a) Quantity demanded equals quantity supplied.
- b) Quantity demanded is greater than quantity supplied.
- c) Quantity supplied is greater than quantity demanded.
- d) Prices are falling.

31. The concept of ceteris paribus means:

- a) All other things being equal.
- b) Demand equals supply.
- c) Price is constant.
- d) Quantity is constant.

32. If the price of a good is above the equilibrium price, there is:
- a) A surplus
- b) A shortage
- c) No effect
- d) Equilibrium

33. If the price of a good is below the equilibrium price, there is:
- a) A surplus
- b) A shortage
- c) No effect
- d) Equilibrium

34. Consumer surplus is:

- a) The difference between what consumers are willing to pay and what they actually pay.
- b) The difference between what producers are willing to accept and what they actually
receive.
- c) The total amount spent by consumers.
- d) The total revenue received by producers.

35. Producer surplus is:

- a) The difference between what producers are willing to accept and what they actually
receive.
- b) The difference between what consumers are willing to pay and what they actually pay.
- c) The total cost of production.
- d) The total revenue received by producers.

36. Inelastic demand means that consumers:

- a) Are not very responsive to price changes.
- b) Are very responsive to price changes.
- c) Will buy more if the price increases.
- d) Will buy less if the price decreases.
37. Elastic demand means that consumers:
- a) Are very responsive to price changes.
- b) Are not very responsive to price changes.
- c) Will buy less if the price increases.
- d) Will buy more if the price decreases.

38. If a product has many close substitutes, its price elasticity of demand is likely to be:
- a) High
- b) Low
- c) Zero
- d) Negative

39. A vertical supply curve indicates:

- a) Perfectly inelastic supply.
- b) Perfectly elastic supply.
- c) Unit elastic supply.
- d) Increasing supply.

40. Labor in economics is defined as:

- a) The physical and mental efforts used in the production process.
- b) The use of machinery in production.
- c) The financial capital invested in a business.
- d) The natural resources used in production.

41. Which of the following is a primary function of labor in production?

- a) Providing raw materials
- b) Manufacturing goods
- c) Investing capital
- d) Offering services

42. The term 'human capital' refers to:

- a) The machinery and equipment used by workers.
- b) The financial investment in a business.
- c) The skills, knowledge, and experience possessed by an individual.
- d) The natural resources available for production.

43. Which of the following is NOT a factor that affects the supply of labor?
- a) Population size
- b) Wage rates
- c) Working conditions
- d) Natural disasters
44. The concept of 'division of labor' means:
- a) The separation of tasks in any economic system so that participants may specialize.
- b) The use of machinery to reduce the need for human labor.
- c) The allocation of financial resources to different industries.
- d) The distribution of natural resources.

45. Which of the following is a disadvantage of division of labor?**

- a) Increased efficiency
- b) Reduced skill variety
- c) Higher productivity
- d) Specialization

46. The demand for labor is considered to be:**

- a) Direct demand
- b) Derived demand
- c) Autonomous demand
- d) Elastic demand

47. Which of the following best describes 'labor mobility'?**

- a) The ease with which labor can switch between different occupations or locations.
- b) The physical movement of goods in production.
- c) The use of technology in reducing labor.
- d) The ability of capital to move across borders.

48. A high level of unemployment indicates:

- a) A surplus of labor supply.
- b) A shortage of labor supply.
- c) An equilibrium in the labor market.
- d) An increase in wage rates.

49. Which of the following government policies can help reduce unemployment?
- a) Increasing taxes
- b) Reducing public spending
- c) Providing job training programs
- d) Imposing import restriction

50. What is the study of how society allocates limited resources to satisfy unlimited wants
called?
A) Economics
B) Political Science
C) Sociology
D) Geography

51. Which of the following is a fundamental economic problem?

A) Unlimited resources
B) Limited resources
C) Unlimited wants
D) Limited wants

52. What is the concept of scarcity in economics?

A) Unlimited resources
B) Limited resources
C) Unlimited wants
D) Limited wants

53. Which of the following is a type of economic system?

A) Traditional economy
B) Command economy
C) Mixed economy
D) All of the above

54. What is the main goal of economic activity?

A) To maximize profits
B) To satisfy unlimited wants
C) To allocate resources efficiently
D) To achieve economic growth

55. Which of the following is a factor of production?

A) Land
B) Labor
C) Capital
D) All of the above

56. What is the study of individual economic units such as households and firms called?
A) Microeconomics
B) Macroeconomics
C) International trade
D) Development economics

57. Which of the following is a macroeconomic goal?

A) Full employment
B) Price stability
C) Economic growth
D) All of the above

58. What is the term for the total value of goods and services produced in an economy?
A) Gross Domestic Product (GDP)
B) Net Domestic Product (NDP)
C) Gross National Product (GNP)
D) Net National Product (NNP)

59. Which of the following is a function of money?

A) Medium of exchange
B) Store of value
C) Unit of account
D) All of the above

60. What is the term for the process of buying and selling goods and services?
A) Trade
B) Commerce
C) Industry
D) Market

SECTION B: ANSWER THREE

QUESTIONS ONLY

Question 1:
1a. Define the law of demand.
1b. Explain three factors that can cause a shift in the demand curve.
1c. Using a diagram, illustrate and explain the effect of an increase in consumer income on the
demand for normal goods.

Question 2:
2a. Define the law of supply.
2b. Explain three factors that can cause a shift in the supply curve.
2c. Using a diagram, illustrate and explain the effect of a technological advancement on the
supply of a product.

Question 3:
3a. What is a demand schedule?
3b. Explain how a demand schedule is used to derive a demand curve.
3c. Construct a demand schedule with hypothetical data and draw the corresponding demand
curve.

Question 4:
4a. What is a supply schedule?
4b. Explain how a supply schedule is used to derive a supply curve.
4c. Construct a supply schedule with hypothetical data and draw the corresponding supply
curve.

Question 5:
5a. What is a normal good?
5b. Explain the difference between normal goods and inferior goods.
5c. Using a diagram, illustrate the effect of an increase in income on the demand for a normal
good.

Question 6:
6a. What is a substitute good?
6b. Explain how the price of one substitute good affects the demand for another.
6c. Using a diagram, illustrate and explain the impact of a price increase in one substitute good
on the demand for the other.