Economics concepts worksheet with answers

Free printable Economics concepts worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy

Which statement is a normative statement?

  1. AHigher prices reduce quantity demanded
  2. BUnemployment fell to 4% in June
  3. CThe minimum wage rose by 3% last year
  4. DThe government should raise the minimum wage
2.Easy

The current account of the balance of payments mainly records:

  1. AThe central bank's interest rate decisions
  2. BTrade in goods and services, primary income and current transfers
  3. CChanges in the government's debt
  4. DPurchases and sales of foreign companies, shares, bonds and other assets
3.Easy

Monopolistic competition is a market with:

  1. AOne firm and high barriers to entry
  2. BMany firms selling differentiated products, with free entry
  3. CA few firms selling identical products
  4. DMany firms selling identical products with no branding or advertising
4.Medium

A savings account pays a nominal interest rate of 6% and inflation is 4%. The approximate real interest rate is:

  1. A24%
  2. B10%
  3. C2%
  4. D1.5%
5.Medium

In the long run in monopolistic competition, firms typically:

  1. AEarn large economic profits protected by entry barriers
  2. BCharge a price equal to marginal cost
  3. CProduce at the minimum of average total cost
  4. DEarn zero economic profit and have excess capacity
6.Medium

The marginal cost curve cuts the average total cost curve:

  1. AAt the maximum point of average total cost
  2. BWhere average total cost equals zero
  3. CAt the minimum point of average total cost
  4. DNever, as the two curves are parallel
7.Hard

A deadweight loss represents:

  1. ALosses made by firms that are forced to leave the market in the long run
  2. BThe loss of total surplus when output differs from the efficient level
  3. CThe tax revenue collected by the government
  4. DThe profit of a monopolist
8.Hard

The Coase theorem states that, if property rights are clearly defined and transaction costs are low:

  1. AThe polluter must always compensate the victim
  2. BGovernments must always tax externalities
  3. CExternalities cannot be corrected without direct government regulation or a Pigouvian tax
  4. DPrivate bargaining can reach an efficient outcome regardless of who holds the rights

Answer key

  1. 1. D · The government should raise the minimum wage
  2. 2. B · Trade in goods and services, primary income and current transfers
  3. 3. B · Many firms selling differentiated products, with free entry
  4. 4. C · 2%
  5. 5. D · Earn zero economic profit and have excess capacity
  6. 6. C · At the minimum point of average total cost
  7. 7. B · The loss of total surplus when output differs from the efficient level
  8. 8. D · Private bargaining can reach an efficient outcome regardless of who holds the rights

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