Economics concepts worksheet with answers

The basic economic problem of scarcity means that:

1. ASome goods are always unavailable in shops because firms produce too little
2. BPrices are always rising over time
3. CWants are unlimited but resources to satisfy them are limited
4. DOnly poor countries need to make choices

According to the law of demand, when the price of a normal good rises (other things equal):

1. AThe quantity demanded rises
2. BThe quantity demanded falls
3. CSupply falls
4. DDemand shifts to the right

Two goods are substitutes if:

1. AThey are produced by the same firm
2. BA rise in the price of one increases demand for the other
3. CThey are always consumed together
4. DA rise in income reduces demand for both goods at the same time

The marginal propensity to consume is:

1. AThe interest rate on consumer loans
2. BThe average share of total income that households save over a year
3. CThe total consumption in an economy
4. DThe share of an extra euro of income that is spent on consumption

In country A, 1 car costs 2 tonnes of wheat to produce; in country B, 1 car costs 4 tonnes of wheat. Which statement is correct?

1. AA has a comparative advantage in cars and B in wheat
2. BNeither country gains from trade
3. CA has a comparative advantage in both goods
4. DB has a comparative advantage in cars and A in wheat

Both supply and demand for a good increase. What can we say for certain about the new equilibrium?

1. ABoth price and quantity fall
2. BPrice rises, but the change in quantity is uncertain
3. CBoth price and quantity rise
4. DQuantity rises, but the change in price is uncertain

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

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

Price discrimination by a firm requires that:

1. AIt operates in perfect competition
2. BAll consumers have identical elasticity of demand and buy the same amount
3. CIt has market power, can separate markets and prevent resale
4. DIts costs differ for each customer