Subject: Applied Economics 12

NAME: _____________________________________ Score: _____ 3rd Term Exam

Instructions: Answer the following sections carefully. Be clear, concise, and provide examples where necessary. Write
your answers on the answer sheet provided.

PART I: Multiple-Choice Questions (10 points)

Choose the letter of the best answer for each question.
1. What is the primary concern of economics as a social science?
a) Studying human behavior in relation to resource allocation
b) Maximizing business profits
c) Analyzing government policies only
d) Eliminating scarcity completely
2. Which of the following best describes the study of microeconomics?
a) It examines inflation, unemployment, and economic growth
b) It focuses on individual and business decision-making
c) It analyzes government spending on infrastructure
d) It only deals with large-scale economic activities
3. Opportunity cost refers to:
a) The total cost of producing a product
b) The value of the best alternative forgone when making a decision
c) The amount of money spent on goods and services
d) The price of a product in the market
4. Applied economics is useful because:
a) It remains theoretical and does not influence real-life decisions
b) It helps governments, businesses, and individuals make informed choices
c) It only benefits large corporations
d) It focuses only on predicting economic trends
5. Which of the following factors directly affects demand?
a) Government production costs b) Consumer preferences and income
c) Technological advancements in production d) Number of suppliers in the market
6. What happens when the price of a product increases, according to the law of demand?
a) The quantity demanded increases b) The quantity demanded decreases
c) The quantity supplied decreases d) Consumers buy more products
7. What is the main effect of inflation on businesses?
a) Reduced cost of raw materials b) Decrease in product demand due to higher prices
c) Increase in consumer purchasing power d) Lower wages for employees
8. Which economic concept explains why people replace expensive goods with cheaper alternatives?
a) Law of Supply b) Law of Diminishing Returns
c) Substitution Effect d) Price Floor
9. Which of the following best describes a price ceiling?
a) It ensures that goods are always expensive b) It is a maximum legal price set below equilibrium
c) It encourages unlimited production of goods d) It prevents businesses from setting their own prices
10. Which of the following is an example of supply chain disruption?
a) A farmer producing more rice than expected
b) Factories shutting down due to a global pandemic
c) A company reducing its product prices due to competition
d) Consumers demanding more goods than are available

PART II: Case Study Analysis (10 points each)

Read the case studies below and answer the corresponding questions.
Case Study 1: Fuel Price Hike
Due to rising global oil prices, the cost of fuel in the Philippines has significantly increased. This has led to higher
transportation costs, which in turn affect the prices of basic commodities such as rice, vegetables, and canned goods.
Question: Using supply and demand analysis, explain how the increase in fuel prices affects consumers, producers, and
the overall market equilibrium.
Case Study 2: The Effect of Inflation on Small Businesses
A bakery in Manila is struggling due to the rising cost of raw materials like flour, sugar, and eggs. To cope, the bakery
increases its bread prices, but this results in a drop in customer demand.
Question: How does inflation affect both businesses and consumers? What strategies can the bakery adopt to balance
costs and demand?
Case Study 3: Government Price Controls on Rice
The Philippine government imposes a price ceiling on rice to make it affordable for consumers. However, many rice
sellers complain that they cannot profit from selling at lower prices, leading to shortages in the market.
Question: What are the advantages and disadvantages of government-imposed price ceilings? Should the government
intervene in pricing, or should the market be left to adjust naturally? Explain.

PART III: Data Interpretation (5 points each)

Analyze the following data and answer the questions.
Year Inflation Rate (%) Unemployment Rate (%) GDP Growth Rate (%)
2020 3.2 10.4 -9.6
2021 4.4 7.8 5.7
2022 6.1 6.2 7.6
1. Based on the data above, what trend can you observe in inflation, unemployment, and GDP growth from 2020 to
2022? What does this indicate about the state of the Philippine economy?
2. How does the change in unemployment rate from 2020 to 2022 affect consumer demand and business growth?

PART IV: Reflection Essay (20 points)

Write a 70 word essay on ONE of the following topics. Again, just choose 1 of the following topics.
1. "The Role of Economics in Everyday Life"
o How does understanding economics help individuals and businesses make better financial decisions?
2. "The Impact of Government Policies on Market Stability"
o Discuss how price controls, taxation, and subsidies influence the economy.
3. "Challenges of Filipino Entrepreneurs in the 21st Century"
o What are the major economic challenges faced by Filipino entrepreneurs today? How can they overcome
these challenges?
Grading Criteria for the Essay:
 Clarity and Organization (5 points)
 Depth of Understanding (5 points)
 Use of Economic Concepts (5 points)
 Grammar and Spelling (5 points)

Final Instructions:
 Your answers must be original and well-explained.
 Cite examples from your notes where applicable.
 Submit on or before March 3, 2025, 4:00 pm.
 Late submissions will have deductions.
📌 God bless! Apply your learning and give your best effort! 😊
 ANSWER SHEET
PART I: Multiple-Choice Questions
1. _____ 2. _____ 3. _____ 4. _____ 5. _____ 6. _____ 7. _____ 8. _____ 9. _____ 10. _____

PART II: Case Study Analysis

Case Study 1: Fuel Price Hike

Case Study 2: The Effect of Inflation on Small Businesses

Case Study 3: Government Price Controls on Rice

PART III: Data Interpretation

1.

2.

PART IV: Reflection Essay

Answer Key – Take-Home Exam
Subject: Applied Economics
Grade Level: 12

PART I: Multiple-Choice Questions (10 points, 1 point each)

1. a) Studying human behavior in relation to resource allocation
(Eco is concerned with how individuals, businesses & governments allocate scarce resources to satisfy needs & wants.)
2. b) It focuses on individual and business decision-making
(Micro studies individual consumer and business decisions, unlike macroeconomics, which looks at national economies.)
3. b) The value of the best alternative forgone when making a decision
(Opportunity cost is what you give up when choosing one option over another.)
4. b) It helps governments, businesses, and individuals make informed choices
(Applied economics uses economic theories to solve real-world problems.)
5. b) Consumer preferences and income
(Demand is influenced by factors like income, preferences, and expectations.)
6. b) The quantity demanded decreases
(According to the law of demand, when prices rise, demand falls, assuming all other factors remain constant.)
7. b) Decrease in product demand due to higher prices
(Inflation increases the cost of production and reduces consumers' purchasing power, lowering demand.)
8. c) Substitution Effect
(When prices rise, consumers tend to switch to cheaper alternatives.)
9. b) It is a maximum legal price set below equilibrium
(A price ceiling prevents prices from rising above a set limit, often causing shortages.)
10. b) Factories shutting down due to a global pandemic
(Supply chain disruptions occur when production or distribution is interrupted, affecting the availability of goods.)

PART II: Case Study Analysis (30 points, 10 points each)

Case Study 1: Fuel Price Hike
Sample Answer:
 Impact on Consumers: Higher fuel prices lead to increased transportation costs, making goods more expensive,
reducing consumers' purchasing power.
 Impact on Producers: Businesses face higher production and delivery costs, forcing them to raise prices or cut
expenses.
 Market Equilibrium: Increased fuel costs reduce supply due to higher production expenses, shifting the supply
curve leftward, resulting in higher prices and lower quantity demanded.
Case Study 2: The Effect of Inflation on Small Businesses
Sample Answer:
 Impact on Businesses: Higher costs of raw materials force businesses to increase prices, which may reduce sales.
 Impact on Consumers: Inflation reduces purchasing power, making essential goods less affordable.
 Strategies for the Bakery:
o Finding cheaper suppliers to reduce costs.
o Reducing portion sizes instead of raising prices drastically.
o Implementing discounts or promotions to maintain sales volume.
Case Study 3: Government Price Controls on Rice
Sample Answer:
 Advantages of Price Ceilings:
o Ensures affordability of essential goods for consumers.
o Helps low-income families access staple goods.
 Disadvantages:
o May lead to shortages as suppliers lose motivation to sell at low prices.
o Encourages black markets where rice is sold at higher prices illegally.
 Should the Government Intervene?
o Market-based pricing can prevent shortages, but government subsidies for farmers can help stabilize
supply.

PART III: Data Interpretation (10 points, 5 points each)

1. Observed Trends in Inflation, Unemployment, and GDP Growth
Sample Answer:
 Inflation: Increased from 3.2% (2020) to 6.1% (2022), meaning rising prices affected consumer purchasing
power.
 Unemployment: Decreased from 10.4% (2020) to 6.2% (2022), indicating economic recovery.
 GDP Growth: Recovered from -9.6% (2020) to 7.6% (2022), showing economic expansion after the recession
caused by COVID-19.
2. Effect of Unemployment Rate Changes on Consumer Demand and Business Growth
Sample Answer:
 Lower unemployment (from 10.4% to 6.2%) increases consumer income, leading to higher demand for goods
and services.
 Businesses benefit from higher consumer spending, improving profits and encouraging expansion.
 Economic stability improves, attracting investments and creating more jobs.

PART IV: Reflection Essay (20 points, scored based on rubric)

(Answers will vary; below are key points that should be included in grading responses.)
1. "The Role of Economics in Everyday Life"
 Economics helps individuals with budgeting, saving, and spending wisely.
 Businesses use economic principles to set prices, manage costs, and maximize profits.
 Government policies influence daily life through taxes, wages, and prices of goods.
2. "The Impact of Government Policies on Market Stability"
 Price controls help consumers afford goods but may cause shortages.
 Taxation affects business costs and consumer purchasing power.
 Subsidies help industries grow but may require heavy government spending.
3. "Challenges of Filipino Entrepreneurs in the 21st Century"
 Inflation, competition, and supply chain disruptions impact small businesses.
 Entrepreneurs can adapt through innovation, digital marketing, and financial planning.
 Government support, such as loans and tax incentives, can help businesses grow.

TOTAL SCORE: 70 POINTS

Grading Guide:
Section Points Criteria
Part I 10 pts Correct and well-explained answers
Part II 30 pts Thoughtful and well-supported analysis
Part III 10 pts Logical interpretation of data
Part IV 20 pts Well-organized, insightful essay

📌 Final Notes for Checking:

 Case studies should use supply and demand concepts appropriately.
 Data interpretation must show logical economic reasoning.
 Essays should apply real economic principles and provide clear examples.