Economics concepts worksheet with answers

Unemployment caused by people moving between jobs is called:

1. ASeasonal unemployment
2. BCyclical unemployment
3. CStructural unemployment
4. DFrictional unemployment

Economies of scale occur when:

1. ALong-run average cost falls as output increases
2. BPrices rise as the firm grows
3. CTotal costs fall as output increases
4. DA firm produces less to cut costs

A point inside a country's production possibility frontier shows:

1. AUnemployed or inefficiently used resources
2. BAn output level that cannot be reached
3. CEconomic growth over time
4. DThe maximum output the economy can produce

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

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

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

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

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

A regulator forces a natural monopoly to set price equal to marginal cost. The likely problem is that:

1. AConsumers face a shortage, because demand exceeds supply at that price
2. BThe firm makes very large profits
3. COutput falls below the monopoly level
4. DThe firm makes a loss because average cost is above marginal cost

A monopolist maximises profit where:

1. ATotal revenue is at its maximum
2. BAverage cost is at its minimum
3. CMarginal revenue equals marginal cost
4. DPrice equals marginal cost