Economics concepts worksheet with answers

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

1. AFall
2. BStay exactly the same
3. CRise
4. DBecome zero

Monopolistic competition is a market with:

1. AA few firms selling identical products
2. BMany firms selling differentiated products, with free entry
3. COne firm and high barriers to entry
4. DMany firms selling identical products with no branding or advertising

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

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

A minimum wage set above the equilibrium wage in a competitive labour market is predicted to cause:

1. ANo change in employment
2. BA fall in the wage rate
3. CA shortage of labour
4. DA surplus of labour (unemployment)

Overfishing in international waters is an example of:

1. AA natural monopoly
2. BPrice discrimination
3. CThe tragedy of the commons
4. DA Giffen good

In the short run, a firm in perfect competition should shut down if the market price is below:

1. AAverage total cost
2. BAverage fixed cost
3. CMarginal revenue
4. DAverage variable cost

The Coase theorem states that, if property rights are clearly defined and transaction costs are low:

1. APrivate bargaining can reach an efficient outcome regardless of who holds the rights
2. BThe polluter must always compensate the victim
3. CGovernments must always tax externalities
4. DExternalities cannot be corrected without direct government regulation or a Pigouvian tax

A Giffen good is one where:

1. AThe price never changes
2. BDemand rises because the good is a status symbol
3. CDemand rises with income, like most goods
4. DQuantity demanded rises when its price rises, because a strong income effect outweighs the substitution effect