Prob Set 1 Introduction to Economics

1. In economic analysis, holder other things constant is necessary in order to

Select one:

a. Calculate the opportunity cost of a decision

b. Avoid mistaking a prior event to be the necessary cause of a current condition

c. Judge whether what holds true for the part also holds true for the whole Incorrect

d. Isolate the relationship of a variable with another variable

e. None of the above

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The correct answer is: Isolate the relationship of a variable with another variable

2. In economic analysis, holder other things constant is necessary in order to

Select one:

a. Calculate the opportunity cost of a decision

b. Avoid mistaking a prior event to be the necessary cause of a current condition

c. Judge whether what holds true for the part also holds true for the whole Incorrect

d. Isolate the relationship of a variable with another variable

e. None of the above

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Your answer is incorrect.

The correct answer is: Isolate the relationship of a variable with another variable

3. If you cut in line at Jollibee, you can order your food faster. Therefore, everyone should cut in line at Jollibee so that
everyone can order their food faster. Which fallacy was committed in this reasoning?

Select one:

a. Post hoc, ergo propter hoc Incorrect

b. Failure to hold other things constant

c. Fallacy of composition

d. A and B

e. A, B, and C

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The correct answer is: Fallacy of composition

4. One of the three main economic functions of the government in a market economy is to pursue macroeconomic stability.
Which of the following falls under this function?

Select one:

a. The Pantawid Pamilyang Pilipino Program, which encourages poor families to send their children to school.

b. The Bangko Sentral ng Pilipinas moderating inflation Correct

c. The K-to-12 program, which expands primary and secondary education

d. The Comprehensive Agrarian Reform Program, which redistributes land assets to indigent farmers.

e. None of the above

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The correct answer is: The Bangko Sentral ng Pilipinas moderating inflation

5. Which of the following DOES NOT characterize capitalism?

Select one:

a. Voluntary and private ownership of means of production

b. The creation and exchange of goods for profit

c. Property rights, which define the ability of an individual to own, buy, sell, and use of capital goods

d. The promotion of equity by the State Correct

e. None of the above (i.e., all statements characterize capitalism)

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The correct answer is: The promotion of equity by the State

6. Which of the following statements is TRUE when an economy is on the production possibility frontier (PPF)?

Select one:

a. Some factors of production are not fully employed

b. The economy is producing inefficiently

c. Increasing the production of any good is not possible without reducing the production of some other goods Correct

d. There are no limits in the amount of goods and services that people can consume

e. Both A and B

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The correct answer is: Increasing the production of any good is not possible without reducing the production of some other
goods

7. Which of the following DOES NOT shift the PPF outward?

Select one:

a. Higher educational attainment of the members of the labor force

b. An increase in the quantity of the labor force Incorrect

c. The invention of high-tech but low-cost factory equipment

d. The discovery of new mineral reserves

e. Productive use of formerly idle lands

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The correct answer is: Productive use of formerly idle lands

Use the following figure to answer questions 8 and 9.

8. What is the opportunity cost of producing 1 unit of Y in terms of X?

Select one:

a. 2/3 units of X

b. 3/2 units of X

c. 1/3 units of X

d. 1 unit of X Incorrect

e. None of the above

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The correct answer is: 2/3 units of X

9. What is the opportunity of cost of producing 1 unit of X in terms of Y?

Select one:

a. 2/3 units of Y

b. 1 unit of Y Incorrect

c. 3/2 unit of Y

d. 1/2 unit of Y
e. None of the above

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The correct answer is: 3/2 unit of Y

For questions 10 and 11, use the figure below

10. Suppose the figure is the PPF of China in the production of grains and warships. Suppose further that
China has implemented an aggressive South China Sea policy. Which point on its PPF would best
describe where it is at?

Select one:

a. A

b. B Correct

c. C

d. D

e. E
11. Now suppose the South China Sea disputes are resolved peacefully. What might be the movement in
China's production possibility space?

Select one:

a. From B to C Correct

b. From C to B

c. From E to C

d. From D to E

e. From A to D

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The correct answer is: From B to C

Prob Set 2 Market Demand and Supply

The circular flow of a market economy illustrates how consumers supply factors of production in the
factor markets to be able to obtain peso votes for the product markets.

Select one:

True Correct

False

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The correct answer is 'True'.

Question 2

Correct

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Question text

Tastes and technology ultimately determine the market price of goods and services
Select one:

True

False Correct

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The correct answer is 'False'.

Question 3

Incorrect

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Question text

Capital goods are consumption goods stored in inventory for consumption sometime in the future.

Select one:

True Incorrect

False

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The correct answer is 'False'.