Economics concepts worksheet with answers

The phrase "ceteris paribus" means:

1. AThe price is fixed
2. BOther things being equal
3. CThe government does not intervene
4. DSupply equals demand

What is opportunity cost?

1. AThe cost of starting a new business
2. BThe value of the best alternative given up when making a choice
3. CThe total money spent on a purchase, including any taxes and fees
4. DThe price of a product during a sale

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

A price ceiling set below the equilibrium price typically causes:

1. ANo change in the market
2. BA surplus
3. CA shortage
4. DAn increase in supply

Unexpectedly high inflation tends to benefit:

1. ABorrowers with fixed-rate loans
2. BSavers holding cash
3. CLenders who receive fixed interest payments
4. DPensioners on fixed nominal incomes

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

1. AIncrease total revenue
2. BLeave total revenue unchanged
3. CReduce quantity demanded to zero
4. DDecrease total revenue

A monopolist maximises profit where:

1. AMarginal revenue equals marginal cost
2. BTotal revenue is at its maximum
3. CPrice equals marginal cost
4. DAverage cost is at its minimum

The Phillips curve originally suggested:

1. AThat unemployment has no link to inflation
2. BA trade-off between inflation and unemployment in the short run
3. CThat inflation and unemployment always rise and fall together in the short run
4. DThat higher taxes always reduce inflation