Economics concepts worksheet with answers

Deflation is:

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

A progressive tax is one where:

1. AEveryone pays the same amount of tax
2. BThe proportion of income paid falls as income rises
3. CEveryone pays the same percentage of income
4. DThe proportion of income paid in tax rises as income rises

Economies of scale occur when:

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

The marginal cost curve cuts the average total cost curve:

1. AWhere average total cost equals zero
2. BAt the maximum point of average total cost
3. CNever, as the two curves are parallel
4. DAt the minimum point of average total cost

Comparative advantage means a country should specialise in goods it can produce:

1. AOnly for its own consumption
2. BAt a lower opportunity cost than other countries
3. CMore cheaply in absolute terms than every other country
4. DWith the most workers

A country imposes a tariff on imported steel. Which effect is most likely?

1. ADomestic steel prices fall and imports rise
2. BDomestic consumers gain surplus
3. CDomestic steel prices rise and domestic production increases
4. DThe world price of steel rises sharply for all countries that trade it

In the Prisoner's Dilemma, the Nash equilibrium is:

1. ABoth players defect, even though both cooperating would be better
2. BBoth players cooperate
3. CThere is no equilibrium
4. DOne player cooperates and the other defects, so only one of them gains

In the "Battle of the Sexes" coordination game, how many pure-strategy Nash equilibria are there?

1. AFour
2. BTwo
3. CNone
4. DOne