LAGUNA UNIVERSITY

RECS Village, Barangay Bubukal, Sta. Cruz, Laguna

PRELIMINARY EXAMINATION IN SOCIAL SCIENCE 3
ECONOMICS WITH TAXATION AND AGRARIAN REFORM
(Prof. Richard K. Lazaro)

Name: ________________________Date: ________________________

Course: ________________________RS: _______ PS: _______
Section & Schedule : __________________

I.MODIFIED TRUE or FALSE. Write A, if the 1st statement is correct;

B, if the 2nd statement is correct;
C, if both statements are correct;
D, if both statements are incorrect.

____1) a. The science of economics came into existence because resources are limited.
b. The science of economics came into existence because wants are unlimited.
____2) a. Land resources embraces anything found beneath and above the earth’s surface.
b. Land resources is synonymous with natural resources.
____3) a. The smaller the population, the better it is for the economy because it would imply less mouths to be
fed.
b. The bigger the population, the better it is for the economy because it would imply larger manpower.
____4) a. Scarcity arises because of multiple wants.
b. Scarcity arises because resources are limited.
____5) a. The solution to our economic problem is to distribute resources equally.
b. The solution to our economic problem is to distribute resources equitably.
____6) a. Economics is not very important in explaining economic phenomena since anyway we could rely on
our homemade theories.
b. Economics is very important in explaining socio-economic phenomena.
____7) a. Command Economy is the best type of economic system in Cuba.
b. Command Economy will best solve the economic problems of the Philippines.
____8) a. Under market system, economic problems are answered through the price mechanism.
b. Under traditional system, economic problems are answered through the price mechanism.
____9) a. A living object or an inanimate object can be considered a resource.
b. Resources are always limited.
___10) a. Resources can be combined.
b. Resources have alternative uses.
___11) a. Natural Resources refer to manmade good that can help us to produce other goods.
b. Scarcity, although a relative term, is as universal as the law of gravity.
___12) a. Manpower resources is not necessary to make our natural resources useful.
b. Manpower is as indispensable as natural resources in in the satisfaction of economic needs.
___13) a. Demand curves slope downward.
b. Supply curves typically have a positive slope.
___14) a. Upward movement along the demand curve shows a decrease in quantity demanded
b. Downward movement along the demand curve shows an increase in quantity demanded
___15) a. Increase in income of the consumers will shift the demand curve to the left.
b. Decrease in income of the consumers will shift the demand curve to the right.
___16) a. Increase in the price of substitute products will shift the demand curve to the right.
b. Decrease in the price of substitute products will shift the demand curve to the left.
___17) a. An increase in the price of coffee will increase the demand for sugar.
b. An increase in the price of sugar will shift the demand curve for coffee.
___18) a. A decrease in the price of complementary products will shift the demand curve to the left.
b. A decrease in the price of complementary products will shift the demand curve to the right.
___19) a. The demand curve is upward sloping to the right while the supply curve is downward sloping
b. The Supply curve is upward sloping to the right while the demand curve is downward sloping
___20) a. The demand for a product is the quantity of a good buyers are willing to buy.
b. The supply for a product is the quantity of a good that sellers are willing to sell.
___21) a. If buyers are expecting for a price increase, DC will shift to the left.
b. If buyers are expecting for a price increase, DC will shift to the right.
___22) a. If sellers are expecting for price increase, SC will shift to the right.
b. If sellers are expecting for price increase, SC will shift to the left.
___23) a. If the cost of producing a good decreases, the SC will shift to the left.
b. If the cost of producing a good decreases, the SC will shift to the right.
___24) a. Substitutes are goods that can serve as replacements for one another.
b. Perfect substitutes are identical products.
___25) a. Households are the consuming units in an economy.
b. Firms are the primary producing units in a market economy.

II. MULTIPLE CHOICE. Encircle the letter of the correct answer.

____1) Which of the following is a production problem?

a. For whom to produce?
b. How much more to produce?
c. What to produce?
d. All of the foregoing.

____2) One of the following is the reason why production problem is the foremost consequence of the relative
scarcity of resources.
a. because of man’s unlimited wants c. because of limited resources
b. people have insatiable wants d. all of the foregoing

____3) Production decisions are made according to customs or traditions.

a. traditional system c. market system
b. command system d. mixed system

____4) The system works under the principle that the interest of society should prevail over that of the
individual.
a. traditional system c.. market system
b. command system d. mixed system

____5.) An economic system which is characterized by free enterprise system

a. traditional system c. market system
b. command system d. mixed system

____6.) All but one are natural resources.

a. water c. forests
b. mineral d. entrepreneur

____7.) Man’s mental and physical effort exerted in production.

 a. land c. capital
b. labor d. machineries

____8.) If rent is to land; then ________is to labor.

a. wages c. profit
b. interest d. revenue

____9.) It is the hypothetical market for the factors of production.

a. output market c. input market
b. firms d. households

____10.) Prices serve as signal to the producers about what good to produce and how much of these goods
should be produced.
a. traditional system c. market system
b. command system d. mixed system

FOR QUESTIONS NOS. 11-25, IDENTIFY THE TYPE OF ELASTICITY

________________11. Quantities demanded and supplied respond heavily to a change in price.
________________12. Quantities demanded and supplied reacts very slightly to a change in price.
________________13. Price is constant; quantity varies .
________________14. Quantity is constant; Prices varies.
________________15. Change in quantity demanded and supplied is equal to a change in price
________________16. ∑ = 0
________________17. ∑ = 1
________________18. ∑ = > 0 < 1
________________19. ∑ = > 1 < infinity
________________20. Electricity, water and telephone services
________________21. Food, clothing & shelter
________________22. Jewelries
________________23. Anti-biotics and other medicines
________________24. Gasoline, LPG & lubricants
________________25. Gourmet food and sports cars

III. Graph Analysis. Analyze the graph carefully, then answer the following questions.
____1. How much is the price equilibrium ?
____2. How much is the equilibrium quantity?
____3. What economic phenomenon is created above the point of equilibrium?
____4. What economic phenomenon is created below the point of equilibrium?
____5. What will happen to price if both supply and demand curves shift to the right with equal percentage?
____6. What will happen to price if SC shifts to the right with DC constant?
____7. What will happen to price if DC shifts to the right with SC constant?
____8. How much is the Ceiling Price?
____9. How much is the Floor Price?
____10. How much is Price Equilibrium at S2?

IV. Identification. Identify the item being described by the following statements.

_________________1. It is a social science that deals with the allocation of scarce human and non-human
resources.
_________________2. A technical term used by economists to refer to economic resouces.
_________________3. It states that as more and more of the same commodity is consumed, the degree of
satisfaction rises at a decreasing rate
_________________4. This law shows the positive relationship between price and quantity supplied.
_________________5. It is a graphical presentation of the inverse relationship of price and quantities of
commodities being traded in the market.
_________________6. It is the degree of responsiveness of quantities demanded and supplied due to a change
in price.
_________________7. It states that as price increases, quantity demanded decreases and vice-versa, ceteris
paribus.
_________________8. This illustrates the influence of the consumption behaviour of others on our own.
_________________9. This law states that as income rises, we tend to allocate smaller percentage for our
food expenditures, thereby increasing our demand for non-food items.
_________________10. It is formal institution organized to solve the basic economic problems.
_________________11. The person who organizes, manages, and assumes the risks of a firm, taking a new
idea or a new product and turning it into a successful business.
_________________12. These are goods that “go together”; a decrease in the price of one results in an
increase in demand for the other, and vice versa.
_________________13. These are goods for which demand goes up when income is higher and for which
demand goes down when income is lower.
_________________14. This refers to the sum of all households wages, salaries, profits, interest payments,
rents, and other forms of earnings in a given period of time.
_________________15. This diagram shows the connections between firms and households in input and
output markets.

V. Essay

1. Illustrate and discuss the Circular Flow of Economic Activity. (10 points)

2. Differentiate equal vs equitable distribution of resources. (10 points)

3. What do you think is the most important economic issue that our country needs to address immediately?
Explain. (5 points)