Activity 1.1.
1
Multiple choice. Encircle the letter of your choice
1. Economics is concerned with
A. Production, distribution and utilization of goods and services
B. The efficient allocation of scarce resources
C. The maximum satisfaction of unlimited human wants
D. None of the above
2. A branch of economics that studies the economy as a whole
A. Positive economics
B. Normative economics
C. Macroeconomics
D. Microeconomics
3. In general, the reason why we economize is due to
A. Instinct
B. Scarcity
C. Self interest
D. Rational behavior
4. The primary activity in an economy is
A. Consumption
B. Distribution
C. Exchange
D. Production
5. Knowledge-based economies are successful because they emphasize that maximum
utilization of
A. Land and capital
B. Land and entrepreneur
C. Capital and labor
D. Labor and entrepreneur
6. These are special type of goods that are made in order to produce other goods.
A. Consumer goods
B. Capital goods
C. Free goods
D. Essential goods
7. It prefers to the ability to organize resources in the production of goods or provision of
services
A. Leading
B. Management
C. Administration
D. Entrepreneurship
8. Refers to goods that have no (zero) price
A. Consumer goods
B. Capital goods
C. Free goods
D. Essential goods
9. It is the quantity divided by price
A. Value
B. Needs
C. Wants
D. Services
10. It deals with facts and cause and effect relationship, and aims to explain economic
behavior.
A. Macroeconomics
B. Microeconomics
C. Normative economics
D. Positive economics
Essay Test. Answer the following
1. Define the following economic terms in your own thinking:
A. Needs – are the things which are necessary for our living and survival.
B. Wants – are the desires of a person.
C. Positive economics – a branch of economics which talks about the description and
explanation of an economic behavior. It has no value judgements.
D. Goods – are tangible products which are sold to consumers.
E. Services – are intangible goods which are rendered to consumers.
F. Free goods – are goods that are freely consumable and is unlimited.
G. Economic goods – are goods which have a price and is limited.
H. Scarcity – refers to the shortage of resources.
I. Economic resources – these are the inputs needed in the production of goods and
services.
J. Entrepreneur – are those risk-taker persons who organizes and manages a
business.
2. Briefly discuss the following questions:
A. What are the reasons for studying economics?
Studying economics is important because it helps us make choices how to use the
limited resources. This could help us students to know how to spend our money
well, helps us understand of what’s happening on our economy and of course,
could help us in making economic decisions.
B. What are the factors of production
Factors of production are those that are needed in order to produce goods and
services and is divided into four categories. First, is Land, which are the natural
resources used to produce goods and services. Second, is Labor, these are all
human efforts that are contributed in the production of goods and services. Third,
is Capital, which are used to start up the production of goods and services. And
lastly, Entrepreneurship, which are the ways to organize and manage the
production of goods and services.
C. What are the two divisions of economics? Differentiate one from the other
The two divisions of economics are microeconomics and macroeconomics.
Microeconomics studies behavior of individual units while Macroeconomics
studies the behavior of the entire economy.
