Economics concepts worksheet with answers

Two goods are complements if:

1. AThey have the same price
2. BDemand for both rises when the price of either one of them rises
3. CA rise in the price of one reduces demand for the other
4. DOne can easily replace the other

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

1. ASupply falls
2. BThe quantity demanded falls
3. CThe quantity demanded rises
4. DDemand shifts to the right

A common rule of thumb defines a recession as:

1. AA fall in the stock market of 10%
2. BAny month with rising unemployment
3. CTwo consecutive quarters of falling real GDP
4. DA year with inflation above 5%

A negative externality occurs when:

1. AA firm makes a loss
2. BConsumers pay more for a product than it costs the firm to produce
3. CA third party bears a cost not paid by the producer or consumer
4. DThe government taxes a product

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

1. A5.3%
2. B95%
3. C5%
4. D50%

The marginal cost curve cuts the average total cost curve:

1. AAt the maximum point of average total cost
2. BNever, as the two curves are parallel
3. CAt the minimum point of average total cost
4. DWhere average total cost equals zero

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

1. AFour
2. BNone
3. COne
4. DTwo

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 defect, even though both cooperating would be better
3. CBoth players cooperate
4. DThere is no equilibrium