Economics concepts worksheet with answers

Which list gives the four traditional factors of production?

1. ASupply, demand, price and quantity
2. BMoney, labour, shares and land
3. CLand, labour, capital and entrepreneurship
4. DWages, rent, interest and profit

If supply increases while demand stays the same, the equilibrium price will usually:

1. AStay exactly the same
2. BFall
3. CBecome zero
4. DRise

A market with only one seller is called:

1. AA monopsony
2. BPerfect competition
3. CA monopoly
4. DAn oligopoly

The principle of diminishing marginal utility states that:

1. ATotal satisfaction falls with each additional unit of the good that is consumed
2. BSatisfaction rises as income falls
3. CConsumers always prefer more expensive goods
4. DExtra satisfaction from each additional unit consumed tends to fall

If the ECB raises its main interest rate, the most likely short-term effect is:

1. AAn immediate rise in GDP
2. BLower borrowing and spending, reducing inflationary pressure
3. CHigher borrowing and spending, which adds to inflationary pressure
4. DA fall in the value of the euro

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

1. AReduce quantity demanded to zero
2. BIncrease total revenue
3. CLeave total revenue unchanged
4. DDecrease total revenue

The Lerner index (P − MC)/P for a profit-maximising monopolist equals 1/|PED|. If |PED| = 4, the price is:

1. A4 times marginal cost
2. B25% above marginal cost, as a share of price
3. CEqual to marginal cost
4. D75% above marginal cost, as a share of price

The J-curve effect describes why, after a depreciation, the trade balance may:

1. AWorsen at first and then improve
2. BImprove immediately and permanently
3. CRemain unchanged for many years
4. DImprove at first and then worsen