Economics concepts worksheet with answers

A progressive tax is one where:

1. AEveryone pays the same amount of tax
2. BEveryone pays the same percentage of income
3. CThe proportion of income paid in tax rises as income rises
4. DThe proportion of income paid falls as income rises

Economies of scale occur when:

1. ATotal costs fall as output increases
2. BLong-run average cost falls as output increases
3. CA firm produces less to cut costs
4. DPrices rise as the firm grows

A cartel is:

1. AA single firm that controls the whole market for a product or service
2. BA government agency that regulates prices
3. CA group of firms that agree to coordinate prices or output
4. DA trade union that negotiates wages

A public good is:

1. AProvided only by private firms
2. BNon-rival and non-excludable
3. CRival and excludable
4. DAny good bought by the government

When a central bank buys government bonds from banks in open market operations, it usually:

1. AReduces bank reserves and so shrinks the money supply
2. BHas no effect on the money supply
3. CIncreases bank reserves and the money supply
4. DRaises tax revenue for the government

Rising consumer confidence would most likely:

1. AHave no effect on the economy
2. BShift aggregate demand to the left
3. CShift aggregate demand to the right
4. DShift aggregate supply to the left

In the Prisoner's Dilemma, the Nash equilibrium is:

1. ABoth players defect, even though both cooperating would be better
2. BThere is no equilibrium
3. CBoth players cooperate
4. DOne player cooperates and the other defects, so only one of them gains

A deadweight loss represents:

1. ALosses made by firms that are forced to leave the market in the long run
2. BThe loss of total surplus when output differs from the efficient level
3. CThe profit of a monopolist
4. DThe tax revenue collected by the government