Economics concepts worksheet with answers

Real GDP differs from nominal GDP because real GDP:

1. AIs measured in a foreign currency
2. BIncludes only goods, not services
3. CIs adjusted for changes in the price level
4. DExcludes government spending

Consumer surplus is:

1. AThe amount of goods left unsold at the end of the day
2. BThe profit that firms make from selling to consumers at prices above their production costs
3. CThe difference between what consumers are willing to pay and what they actually pay
4. DThe total amount consumers spend on a good

The basic economic problem of scarcity means that:

1. AOnly poor countries need to make choices
2. BSome goods are always unavailable in shops because firms produce too little
3. CPrices are always rising over time
4. DWants are unlimited but resources to satisfy them are limited

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

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

Education generates benefits for society beyond the individual student. Without intervention, the market will likely:

1. AStop providing education altogether
2. BOver-provide education compared with the social optimum
3. CProvide exactly the efficient amount of education, as prices reflect all benefits
4. DUnder-provide education compared with the social optimum

A Nash equilibrium is a situation where:

1. ANo player can improve their payoff by changing strategy alone, given the others' strategies
2. BThe players agree to cooperate through a binding contract that maximises their combined total payoff
3. COne player has won and the others have lost
4. DAll players achieve the highest possible total payoff

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

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

A lump-sum tax (a fixed amount, independent of output) is imposed on a profit-maximising monopolist. In the short run, its output will:

1. AFall to zero
2. BFall, because the tax raises the firm's average cost
3. CStay the same, because MR and MC do not change
4. DRise to make up for the tax