Economics concepts worksheet with answers

Which statement is a normative statement?

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

A market with only one seller is called:

1. AAn oligopoly
2. BA monopsony
3. CA monopoly
4. DPerfect competition

Unemployment caused by people moving between jobs is called:

1. AFrictional unemployment
2. BSeasonal unemployment
3. CStructural unemployment
4. DCyclical unemployment

A per-unit tax is placed on a good with very inelastic demand and elastic supply. Who bears most of the tax burden?

1. AThe government
2. BProducers
3. CIt is always split equally
4. DConsumers

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. AA has a comparative advantage in both goods
2. BNeither country gains from trade
3. CA has a comparative advantage in cars and B in wheat
4. DB has a comparative advantage in cars and A in wheat

The price of petrol rises sharply. What happens to the demand curve for large cars?

1. AIt becomes vertical
2. BIt shifts to the right
3. CThere is a movement along it
4. DIt shifts to the left

In the Solow growth model, sustained long-run growth in output per worker comes from:

1. AGovernment budget deficits
2. BA higher saving rate alone
3. CTechnological progress
4. DPopulation growth

Why does the deadweight loss of a tax grow when the good's demand and supply are more elastic?

1. AThe government collects more tax revenue
2. BElastic markets have no consumer surplus
3. CQuantity traded falls more, so more mutually beneficial trades are lost
4. DPrices do not change, so consumers bear the whole burden of the tax instead