Economics concepts worksheet with answers

The current account of the balance of payments mainly records:

1. AThe central bank's interest rate decisions
2. BChanges in the government's debt
3. CTrade in goods and services, primary income and current transfers
4. DPurchases and sales of foreign companies, shares, bonds and other assets

Adam Smith's example of the pin factory illustrated the benefits of:

1. AGovernment regulation
2. BFree trade between countries
3. CThe division of labour
4. DPrice controls

A tariff is:

1. AA limit on the quantity of imports
2. BA ban on all foreign trade
3. CA subsidy for exporters
4. DA tax on imported goods

Education generates benefits for society beyond the individual student. Without intervention, the market will likely:

1. AStop providing education altogether
2. BUnder-provide education compared with the social optimum
3. COver-provide education compared with the social optimum
4. DProvide exactly the efficient amount of education, as prices reflect all benefits

The marginal propensity to consume is:

1. AThe share of an extra euro of income that is spent on consumption
2. BThe total consumption in an economy
3. CThe average share of total income that households save over a year
4. DThe interest rate on consumer loans

In the short run, a firm in perfect competition should shut down if the market price is below:

1. AMarginal revenue
2. BAverage total cost
3. CAverage fixed cost
4. DAverage variable cost

A monopolist faces demand P = 100 − Q and has constant marginal cost of 20. What are its profit-maximising output and price?

1. AQ = 50, P = 50
2. BQ = 40, P = 20
3. CQ = 80, P = 20
4. DQ = 40, P = 60

A monopolist maximises profit where:

1. ATotal revenue is at its maximum
2. BMarginal revenue equals marginal cost
3. CPrice equals marginal cost
4. DAverage cost is at its minimum