Economics concepts worksheet with answers

Free printable Economics concepts worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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1.Easy

Marginal cost is:

  1. AThe extra cost of producing one more unit of output
  2. BThe lowest price a firm can charge
  3. CThe cost of the firm's buildings and machines
  4. DTotal cost divided by the total number of units produced
2.Easy

Structural unemployment is caused by:

  1. AA mismatch between workers' skills or location and the jobs available
  2. BSeasonal changes in demand for labour
  3. CA temporary fall in aggregate demand
  4. DThe normal time that workers take to search for and move between jobs
3.Easy

A budget deficit occurs when:

  1. AA firm's costs exceed its revenue
  2. BGovernment spending exceeds government revenue in a year
  3. CThe value of imports exceeds the value of exports in a year
  4. DTotal government debt falls
4.Medium

A public good is:

  1. AAny good bought by the government
  2. BRival and excludable
  3. CProvided only by private firms
  4. DNon-rival and non-excludable
5.Medium

The price of a good rises by 10% and quantity demanded falls by 20%. The price elasticity of demand is:

  1. A-2, so demand is inelastic
  2. B-0.5, so demand is elastic
  3. C-0.5, so demand is inelastic
  4. D-2, so demand is elastic
6.Medium

A firm has spent €1 million on research for a product that now looks unprofitable. When deciding whether to continue, the €1 million should be:

  1. AIgnored, because it is a sunk cost
  2. BTreated as the opportunity cost of stopping
  3. CRecovered by raising prices
  4. DAdded to the expected future costs
7.Hard

The Coase theorem states that, if property rights are clearly defined and transaction costs are low:

  1. AThe polluter must always compensate the victim
  2. BGovernments must always tax externalities
  3. CPrivate bargaining can reach an efficient outcome regardless of who holds the rights
  4. DExternalities cannot be corrected without direct government regulation or a Pigouvian tax
8.Hard

A Giffen good is one where:

  1. AThe price never changes
  2. BQuantity demanded rises when its price rises, because a strong income effect outweighs the substitution effect
  3. CDemand rises because the good is a status symbol
  4. DDemand rises with income, like most goods

Answer key

  1. 1. A · The extra cost of producing one more unit of output
  2. 2. A · A mismatch between workers' skills or location and the jobs available
  3. 3. B · Government spending exceeds government revenue in a year
  4. 4. D · Non-rival and non-excludable
  5. 5. D · -2, so demand is elastic
  6. 6. A · Ignored, because it is a sunk cost
  7. 7. C · Private bargaining can reach an efficient outcome regardless of who holds the rights
  8. 8. B · Quantity demanded rises when its price rises, because a strong income effect outweighs the substitution effect

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