Economics concepts worksheet with answers

A good for which demand rises when income rises is called:

1. AA public good
2. BAn inferior good
3. CA Giffen good
4. DA normal good

The unemployment rate is calculated as:

1. AThe number of unemployed divided by the total population
2. BThe number of job vacancies divided by the population
3. CThe number of employed divided by the labour force
4. DThe number of unemployed divided by the labour force

Inflation is:

1. AA rise in the price of one product
2. BAn increase in the money supply, whatever happens to prices
3. CA fall in unemployment
4. DA sustained rise in the general price level

In the long run in monopolistic competition, firms typically:

1. AProduce at the minimum of average total cost
2. BEarn zero economic profit and have excess capacity
3. CEarn large economic profits protected by entry barriers
4. DCharge a price equal to marginal cost

If demand for a product is price inelastic, a price increase will:

1. AReduce quantity demanded to zero
2. BDecrease total revenue
3. CIncrease total revenue
4. DLeave total revenue unchanged

Rising consumer confidence would most likely:

1. AShift aggregate demand to the right
2. BShift aggregate supply to the left
3. CHave no effect on the economy
4. DShift aggregate demand to the left

Under perfect (first-degree) price discrimination, the monopolist:

1. ACaptures all consumer surplus and produces the efficient output
2. BCreates the largest possible deadweight loss
3. CProduces less than a single-price monopolist, creating a larger deadweight loss
4. DCharges every consumer the same price

In the Bertrand model, two firms sell identical products with the same constant marginal cost and compete on price. The equilibrium price is:

1. AEqual to marginal cost
2. BZero
3. CThe monopoly price
4. DHalfway between monopoly price and marginal cost