ECO I

Preliminary Examination
Name:

I. Multiple Choice. Choose the best answer.
1. If the price of popcorn fell and, as a result, the demand for the powdered cheese fell, we could conclude that
popcorn and powdered cheese are:
a. Normal goods
b. Complements
c. Substitute
d. Independent
2. The law of supply states that, other things being unchanged:
a. as the price rises, the quantity supplied rises
b. as the price rises, the quantity supplied falls
c. as the supply rises, the price falls
d. as the demand rises, the supply falls
3. If the price is elasticity of demand equals 0.5, the demand for the product is:
a. inelastic
b. elastic
c. perfectly inelastic
d. unit elastic
4. In drawing the demand curve, if the demand for the product is more inelastic, you would draw the line:
a. flatter
b. steeper
c. horizontal
d. vertical
5. The price elasticity of demand is the:
a. Percentage change in quantity demanded divided by the percentage change in price
b. Percentage change in price divided by the percentage change in quantity demanded
c. peso change in quantity demanded divided by the peso change in price
d. percentage change in quantity demanded divided by the percentage change in quantity supplied
II. Enumeration. Enumerate the following.
Non-price determinants of supply
6.
7.
8.
9.
10.
Non-price determinants of demand
11.
12.
13.
14.
15.
III. Solving. Solve the following.
Price of
movie ticket
Movie
tickets
Popcorn Arcade
(Tokens)
Can of Coke
Php150 2 3 10 4
Php200 1 2 20 4

a. Compute the cross price elasticity with respect to the price of a movie ticket. (3pts)
b. Compute the cross price elasticity of Tokens with respect to the price of a movie ticket.(3pts)
c. Compute the cross price elasticity of Coke with respect to the price of a movie ticket.(3pts)
d. Are movie tickets and popcorn substitutes or compliments?(2pts)
e. Are movie tickets and arcade substitute or complements?(2pts)
f. Are movie tickets and coke substitute or compliments?(2pts)