Economics concepts worksheet with answers

In economics, the short run is a period in which:

1. AAt least one factor of production is fixed
2. BThe firm must make a loss
3. CPrices cannot change
4. DAll factors of production can be varied

Two goods are complements if:

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

Macroeconomics studies:

1. AThe decisions of individual households and firms in particular markets
2. BThe economy as a whole, such as inflation, unemployment and growth
3. CThe accounts of a single company
4. DOnly the stock market

Stagflation is a combination of:

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

In an oligopoly, firms are typically:

1. AMany and too small to affect the price
2. BFew and interdependent in their decisions
3. CA single seller in the market
4. DCompletely unregulated by competition law

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

The principal–agent problem arises when:

1. AAn agent acting for a principal has different goals and the principal cannot fully monitor them
2. BA buyer and seller have identical information
3. CTwo firms agree to fix prices
4. DThe government owns a firm

The "convergence hypothesis" from the Solow model predicts that:

1. APoorer countries with similar fundamentals tend to grow faster than richer ones
2. BRich countries always grow faster than poor ones, because they have more capital
3. CAll countries will eventually have the same population
4. DExchange rates converge to a fixed value