Economics concepts worksheet with answers

Which list gives the four traditional factors of production?

1. ALand, labour, capital and entrepreneurship
2. BMoney, labour, shares and land
3. CWages, rent, interest and profit
4. DSupply, demand, price and quantity

Macroeconomics studies:

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

Consumer surplus is:

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

If the ECB raises its main interest rate, the most likely short-term effect is:

1. ALower borrowing and spending, reducing inflationary pressure
2. BA fall in the value of the euro
3. CAn immediate rise in GDP
4. DHigher borrowing and spending, which adds to inflationary pressure

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. AAdded to the expected future costs
2. BRecovered by raising prices
3. CTreated as the opportunity cost of stopping
4. DIgnored, because it is a sunk cost

A country has 950 employed people and 50 unemployed people seeking work. Its unemployment rate is:

1. A50%
2. B95%
3. C5%
4. D5.3%

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 tax revenue collected by the government
4. DThe profit of a monopolist

Moral hazard arises when:

1. APrices are too high for poor consumers
2. BA buyer cannot observe product quality before buying, so low-quality sellers dominate the market
3. COne party changes behaviour after a contract because they do not bear the full consequences
4. DTwo firms collude on price