Economics concepts worksheet with answers

Monopolistic competition is a market with:

1. AOne firm and high barriers to entry
2. BMany firms selling differentiated products, with free entry
3. CA few firms selling identical products
4. DMany firms selling identical products with no branding or advertising

Consumer surplus is:

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

A point inside a country's production possibility frontier shows:

1. AThe maximum output the economy can produce
2. BEconomic growth over time
3. CUnemployed or inefficiently used resources
4. DAn output level that cannot be reached

A savings account pays a nominal interest rate of 6% and inflation is 4%. The approximate real interest rate is:

1. A2%
2. B24%
3. C1.5%
4. D10%

In an oligopoly, firms are typically:

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

Using the expenditure approach, GDP equals:

1. AWages + profits − taxes
2. BC + I + G + X + M
3. CC + I + G + (X − M)
4. DC − I + G − (X + M)

The Marshall–Lerner condition states that a currency depreciation improves the trade balance if:

1. AInterest rates rise at the same time
2. BThe country has a budget surplus
3. CThe sum of the price elasticities of demand for exports and imports exceeds 1
4. DExports and imports have zero price elasticity

The Laffer curve illustrates that:

1. ALower tax rates always reduce tax revenue, whatever the starting rate
2. BBeyond some point, raising tax rates can reduce total tax revenue
3. CHigher tax rates always increase tax revenue
4. DTax revenue is unrelated to tax rates