Economics concepts worksheet with answers

Which list gives the four traditional factors of production?

1. AMoney, labour, shares and land
2. BLand, labour, capital and entrepreneurship
3. CSupply, demand, price and quantity
4. DWages, rent, interest and profit

Consumer surplus is:

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

Macroeconomics studies:

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

The law of diminishing marginal returns states that:

1. ATotal output always falls as more workers are hired
2. BAdding more of a variable input to a fixed input eventually lowers the extra output per unit added
3. CLong-run average costs always fall as output rises
4. DConsumers get less satisfaction as prices rise

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

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

In perfect competition in the long run, firms earn:

1. AMonopoly profits
2. BLosses forever
3. CLarge economic profits
4. DZero economic profit

Why is the real-world government spending multiplier usually smaller than the simple 1/(1 − MPC)?

1. ATaxes, imports and crowding out leak part of each round of spending
2. BConsumers never spend extra income
3. CThe MPC is always above 1
4. DGovernments cannot borrow money

In the Bertrand model, two firms sell identical products with the same constant marginal cost and compete on price. The equilibrium price is:

1. AEqual to marginal cost
2. BHalfway between monopoly price and marginal cost
3. CThe monopoly price
4. DZero