Economics concepts worksheet with answers

A cartel is:

1. AA trade union that negotiates wages
2. BA single firm that controls the whole market for a product or service
3. CA government agency that regulates prices
4. DA group of firms that agree to coordinate prices or output

Which list gives the four traditional factors of production?

1. ASupply, demand, price and quantity
2. BLand, labour, capital and entrepreneurship
3. CWages, rent, interest and profit
4. DMoney, labour, shares and land

Deflation is:

1. AA slowdown in the rate of inflation, with prices still rising
2. BA sustained fall in the general price level
3. CA fall in the value of the currency
4. DA reduction in government spending

Stagflation is a combination of:

1. AHigh inflation and high unemployment with low growth
2. BHigh growth and falling prices
3. CLow inflation and low unemployment
4. DDeflation and rapid growth

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

Education generates benefits for society beyond the individual student. Without intervention, the market will likely:

1. AOver-provide education compared with the social optimum
2. BUnder-provide education compared with the social optimum
3. CStop providing education altogether
4. DProvide exactly the efficient amount of education, as prices reflect all benefits

The Laffer curve illustrates that:

1. ATax revenue is unrelated to tax rates
2. BBeyond some point, raising tax rates can reduce total tax revenue
3. CHigher tax rates always increase tax revenue
4. DLower tax rates always reduce tax revenue, whatever the starting rate

A deadweight loss represents:

1. AThe profit of a monopolist
2. BLosses made by firms that are forced to leave the market in the long run
3. CThe loss of total surplus when output differs from the efficient level
4. DThe tax revenue collected by the government