Final Exam (Essay) Economics.docx

GOOD NEWS ACADEMY, INC.

#5 Quisumbing St., Trancoville, Baguio City Applied Economics Mid-Term Examination 20 July 2018 Name:

3:00 pm -4:00 pm Date:

1. Explain why scarcity affects both the poorest and the richest persons in the Philippines. 2. Explain the link between scarcity of time or money and each of the following: a. Opportunity cost of spending ten pesos on a new ballpen. b. Opportunity cost of walking your dog a few blocks. c. Opportunity cost of attending college. 3. Why do most Metro Manila residents travel to Baguio City by bus, while wealthy businessmen are more likely to travel by air? Use the concept of opportunity cost in your answer. 4. Attending high school is time-consuming and requires a lot of effort. So why do many young people decide to attend high school? Use the concept of opportunity cost in your answer. 5. “Fast-food or quick service restaurants fulfil a valuable role by catering to time-pressured costumers.” Discuss this statement. Use the concept of opportunity cost in your answer. 6. Make a list of devices that were developed in response to higher opportunity cost of time spent cleaning the house and doing laundry. v iew, there is no such 7. Why is it very important to reco gnize that, from society’s point of view, thing as free medical care, free housing, and bridges (“there is no charge to cross it”)? 8. Why is it very important to recognize that choices on electric power consumption are made at the margin? 9. Suppose that there is a sudden new trend for high school students all over the Philippines to ride bicycles more. How would t he price system decide “who should get what is i s produced?” How would the inputs used in bicycle production be affected? 10. True or false? Explain your answer. A price ceiling set below the equilibrium price does the following: a. Decrease quantity supplied b. Makes some buyers better off and others worse off c. Makes all sellers better off 11. True or false? Explain your answer. A price floor set above the equilibrium price does the following: a. Increases quantity demanded b. Makes some sellers better off and some others off c. Makes all buyers better better off 12. Which of the following statements do you think indicate/s sound economic thinking? Explain your answer. a. My parents paid for this economics course. Therefore, I’m going to a ttend every lecture even if it is useless and boring. b. Because we own a house rather than rent, and the house is paid for, living in our own house does not cost us anything.

c.

I own a desktop computer that I cannot afford to sell until I find a buyer who is willing to let me cover at least my original payment. 13. Imagine that your family owns a house and your monthly house payment is P 5,000 (your parents availed of a housing loan and the house is not paid for). S uppose your family plans to relocate temporarily. Should your parents refuse to rent out the house you’re  moving out of for P 4,000 (if this is the best offer available) because it is less than their monthly house payment? Explain your answer.