Economics concepts worksheet with answers

Which of these is a barrier to entry into a market?

1. AMany small firms selling identical products
2. BLow start-up costs
3. CPerfect information for all buyers
4. DPatents held by existing firms

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

1. AAn inferior good
2. BA normal good
3. CA public good
4. DA Giffen good

Price elasticity of demand measures:

1. AHow quickly prices change over time
2. BHow responsive quantity demanded is to a change in price
3. CHow much firms can raise their prices
4. DHow responsive quantity supplied is to changes in consumer income

In the long run in monopolistic competition, firms typically:

1. AEarn zero economic profit and have excess capacity
2. BCharge a price equal to marginal cost
3. CProduce at the minimum of average total cost
4. DEarn large economic profits protected by entry barriers

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A5%
2. B5.3%
3. C50%
4. D95%

A price ceiling set below the equilibrium price typically causes:

1. AAn increase in supply
2. BNo change in the market
3. CA shortage
4. DA surplus

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

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

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

1. AImprove at first and then worsen
2. BWorsen at first and then improve
3. CImprove immediately and permanently
4. DRemain unchanged for many years