SERVICES (ECODEV, AIS, AND IT APPLICATION AND TOOLS) A Qualifying Exam Review ECONOMICS What are the Main Branches of Economics? MICROECONOMIC CONCEPTS LAW OF SUPPLY
Price S S’ Factors affecting Supply:
1. Production Costs 2. Number of Producers 3. Technology 4. Government policies 5. Price of related goods/services 6. Price Quantity I. The market supply curve for wooden shipping crates would shift to the right if there is a government subsidy for shipping crates. II. An improvement in the technology used to produce solar panels will lead to a movement along the supply curve.
A. True; False B. False; True C. Both statements are true D. Both statements are false I. The market supply curve for wooden shipping crates would shift to the right if there is a government subsidy for shipping crates. II. An improvement in the technology used to produce solar panels will lead to a movement along the supply curve.
A. True; False B. False; True C. Both statements are true D. Both statements are false All of the following shifts the supply of watches to the right except
A. An increase in the price of watches
B. Manufacturer’s expectations of lower watch prices in the future C. An advance in the technology used to manufacture watches D. All of the above shifts the supply to the right All of the following shifts the supply of watches to the right except
A. An increase in the price of watches
B. Manufacturer’s expectations of lower watch prices in the future C. An advance in the technology used to manufacture watches D. All of the above shifts the supply to the right LAW OF DEMAND
Price Factors affecting Demand:
1. Expectation 2. Consumer income 3. Population growth 4. Taste/Preferences D D’ 5. Price of related goods/services 6. Price Quantity If people expect the price of coffee to rise next month, the demand for coffee will
A. Decrease now B. Increase now C. Stay the same now and increase next month D. Stay the same now and next month If people expect the price of coffee to rise next month, the demand for coffee will
A. Decrease now B. Increase now C. Stay the same now and increase next month D. Stay the same now and next month LAW OF DEMAND Higher prices decreases the quantity demanded for two reasons: 1. Substitution Effect – a higher relative price raises opportunity cost of buying a good, as a result, people buy less of the goods as there could be other available goods with a lower price.
➢ Substitute Goods ➢ Complementary Goods
2. Income Effect – a higher relative price reduces the amount of
goods people can afford to buy. Consider cars and gasoline. Other things being equal, when the price of cars increases, the demand for gasoline is likely to
A) decrease because the two goods are complements.
B) remain unchanged. C) increase because the two goods are complements. D) remain unchanged because cars and gasoline are produced independently of one another. E) remain unchanged because cars and gasoline are two distinct markets. Consider cars and gasoline. Other things being equal, when the price of cars increases, the demand for gasoline is likely to
A) decrease because the two goods are complements.
B) remain unchanged. C) increase because the two goods are complements. D) remain unchanged because cars and gasoline are produced independently of one another. E) remain unchanged because cars and gasoline are two distinct markets. EQUILIBRIUM Price S Market Surplus
P Equilibrium Point
Market Shortage D
Q Quantity Price Elasticity of Demand 𝑄𝐷2− 𝑄𝐷1 𝑄𝐷1 𝑃2− 𝑃1 𝑃1 Price Elasticity of Supply 𝑄𝑆2− 𝑄𝑆1 𝑄𝑆1 𝑃2− 𝑃1 𝑃1 Price Elasticity of Demand
Exercise Problem: Day 1- unit price was set at P90 each, the sales reached 100 units. Day 2 - unit price was raised to P110 each, the sales decreased to 90 units. 90 − 100 100 110 − 90 90
−0.1 0.22
𝑃𝐸𝐷 = 0.45 If ED > 1, demand is said to be elastic (sensitive to price changes) If ED = 1, demand is said to be unit-elastic/unitary (insensitive to price changes) If ED < 1, demand is said to be inelastic (not that sensitive to price changes) The effect of price changes may be summarized as follows:
Price ED > 1 ED < 1 ED = 1
Change (elastic) (inelastic) (unitary)
Increase Total revenue Total revenue Total revenue is the
decreases increases same
Decrease Total revenue Total revenue Total revenue is the
increases decreases same Market Models
Monopolistic competition is characterized by
A. A relatively large group of sellers who produce differentiated
products B. A relatively small group of sellers who produce differentiated products C. A monopolistic market where the consumer is persuaded that there is perfect competition D. A relatively large group of sellers who produce a homogenous product Market Models
Monopolistic competition is characterized by
A. A relatively large group of sellers who produce differentiated
products B. A relatively small group of sellers who produce differentiated products C. A monopolistic market where the consumer is persuaded that there is perfect competition D. A relatively large group of sellers who produce a homogenous product Four basic market models are:
Market No. of Firms Products/ Ease of Entry Common
Services Examples Perfect Very Many Identical Very Easy Agricultural Products Competition Monopolistic Many Differentiated Fairly Easy Fast Food, Cosmetics Competition Oligopoly Few Standardized Hard Telecommunications, TV stations Monopoly One Unique Blocked Utility Companies MACROECONOMICS CONCEPTS MACROECONOMICS CONCEPTS Gross national product (GNP) is the
A. Total purchases by consumers, business, government, and entities
B. Total amount of expenditures for consumer goods and investment for a period of time C. Value of all final goods and services produced by the country by both domestic and foreign-owned sources D. Value of all goods and services produced by the country by domestic firms, excluding those produced by foreign-owned companies MACROECONOMICS CONCEPTS Gross national product (GNP) is the
A. Total purchases by consumers, business, government, and entities
B. Total amount of expenditures for consumer goods and investment for a period of time C. Value of all final goods and services produced by the country by both domestic and foreign-owned sources D. Value of all goods and services produced by the country by domestic firms, excluding those produced by foreign-owned companies MACROECONOMICS CONCEPTS
Philippine imports from USA goods that are made in Africa.
This transaction most likely increases the GDP of
A. Philippines B. USA C. Africa D. None of the above MACROECONOMICS CONCEPTS
Philippine imports from USA goods that are made in Africa.
This transaction most likely increases the GDP of
A. Philippines B. USA C. Africa D. None of the above MACROECONOMICS CONCEPTS
GDP if adjusted for inflation is called ______, while GDP
unadjusted for changing prices is called _______
A. Real GDP; Fake GDP
B. Nominal GDP; Real GDP C. Real GDP; Nominal GDP D. Adjusted GDP; Real GDP MACROECONOMICS CONCEPTS
GDP if adjusted for inflation is called ______, while GDP
unadjusted for changing prices is called _______
A. Real GDP; Fake GDP
B. Nominal GDP; Real GDP C. Real GDP; Nominal GDP D. Adjusted GDP; Real GDP APPROACHES IN DETERMINING THE GROSS DOMESTIC PRODUCT
EXPENDITURE APPROACH: GDP = Consumption + Investment + Government Spending + Net Exports (Exports – Imports)
INCOME APPROACH: GDP = Salaries & Wages + Rent + Interest + Profit + Taxes + Depreciation and Amortization – Income Earned Abroad (OFW)
(2) Ways of Measuring GDP
➢ Nominal GDP - Using current prices ➢ Real GDP - Constant prices of a given year, and removing its inflations (Nominal GDP – Inflation) Inflation • Refers to the rate of increase in prices over a given period of time.
Primary causes of inflation:
➢ Demand-Pull Inflation – happens when there is excess or too much
demand for certain goods and services that are not met by a corresponding increase in the supply of those goods and services.
➢ Cost-Push Inflation – happens when there is a general increase in
the cost of production that may be due to higher wages or increase in the cost of raw materials and other inputs. FISCAL POLICY VS. MONETARY POLICY
Fiscal Policy is a government action, such as taxes,
subsidies, and government spending, designed to achieve economic goals.
Monetary Policy is under the control of the Bangko
Sentral ng Pilipinas (BSP), such as changing interest rates and the amount of money in the economy. FISCAL POLICY VS. MONETARY POLICY
The most effective fiscal policy program for reducing demand-
pull inflation is to:
A. Decrease government spending and increase taxes
B. Increase government spending and decrease taxes C. Increase both government spending and taxes D. Decrease the money supply FISCAL POLICY VS. MONETARY POLICY
The most effective fiscal policy program for reducing demand-
pull inflation is to:
A. Decrease government spending and increase taxes
B. Increase government spending and decrease taxes C. Increase both government spending and taxes D. Decrease the money supply ACCOUNTING INFORMATION SYSTEM What is the first operational stage in the information system? A. Data Processing B. Data Collection C. Data Retrieval D. Information Generation What is the first operational stage in the information system? A. Data Processing B. Data Collection C. Data Retrieval D. Information Generation Elements of the General Model for AIS
➢ Data Sources - financial transactions that enter the information system from both internal and external sources. ➢ Data Collection - first operational stage in the information system. The objective is to ensure that event data entering the system are valid, complete, and free from material errors. ➢ Data Processing - once collected, data usually require processing to produce information. ➢ Database Management - physical repository for financial and nonfinancial data. ➢ Information Generation - the process of compiling, arranging, formatting, and presenting information to users ➢ End users – Internal/ External Enterprise Resource Planning (ERP) System
ERP system - A system that integrates all aspects of an organization’s
activities—such as accounting, finance, marketing, human resources, manufacturing, inventory management— into one system. An ERP system is modularized; companies can purchase the individual modules that meet their specific needs. An ERP facilitates information flow among the company’s various business functions and manages communications with outside stakeholders. Internal Control
Describes the policies, plans, and procedures implemented
by a firm to protect its assets.
Provides reasonable assurance of:
➢ effectiveness and efficiency, ➢ reliability of financial reporting, and ➢ compliance with applicable laws Control Procedures Analysis
Control Procedures can be classified as
➢ Preventive Controls - to prevent some potential problem from occurring when an activity is performed. ➢ Detective Controls - alert us when preventive controls have failed. ➢ Corrective controls - to remedy problems discovered through detective controls. Threats to the Accounting Information System ➢ Natural and Political Disasters - such as fires, floods, earthquakes, hurricanes, tornadoes, blizzards, wars, and attacks by terrorists – can destroy an information system and cause many companies to fail. ➢ Software Errors and Equipment Malfunctions - includes operating system crashes, hardware failures, power outages and fluctuations, and undetected data transmission errors. ➢ Unintentional Acts - includes accidents caused by human carelessness, failure to follow established procedures, and poorly trained or supervised personnel, innocent errors or omissions, lost, erroneous, destroyed, or misplaced data, logic errors, and systems that do not meet company needs or cannot handle intended tasks ➢ Intentional Acts - includes sabotage, misrepresentation, false use, or unauthorized disclosure of data, misappropriation of assets, financial statement fraud, corruption, and computer fraud – attacks, social engineering, malware etc. IT APPLICATION AND TOOLS IN BUSINESS Why is Information Technology important for businesses?
A. Developed Information Technology
increases productivity B. IT provides electronics storage systems C. IT makes remote working possible D. All of the above Why is Information Technology important for businesses?
A. Developed Information Technology
increases productivity B. IT provides electronics storage systems C. IT makes remote working possible D. All of the above Components of a Computer
Hardware Software
Input Devices Output Devices
Internal Storage Devices Components Network – a large system consisting of similar parts that are connected together to allow movement or communication between or along the parts, or between the parts and a control center.
Two most common types of networks:
Local Area Network (LAN) - one of the most commonly used
computer network that cover a small area such as house, room, or building. Provide high-speed bandwidth to internal devices. Wide Area Network (WAN) - this type of computer is used within regional or national areas. Typically provide slower speed links between LANs. Intranet - it refers to the internal network of a business organization; only authorized users can access the network through the internet; web browsers under supervision and control of the business organization. Extranet - it refers to the network of a business organization that has a limited scope; give access only to trusted entities. Internet - the largest network consisting of interconnected government, private, public, academic, and business entities linked by various technologies ranging from electronic and wireless to fiber optic
