Worksheet 1: Economic terms

Define each economic term in the spaces provided.

Section 1: The basic economic problem

1 . The economic problem

2 . Resources

3 . Wants

4 . Economic goods

5 . Free goods

6 . Land

7 . Labour

8 . Capital

9 . Enterprise

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10 . Opportunity cost

11 . Production possibility curve (PPC)

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Worksheet 2: Stating examples
State as many relevant and specific examples as possible in the spaces provided.

Section 2: The allocation of resources

1 State the two branches of economics and the decision makers involved in each.

2 State the three basic economic questions.

3 State two of the functions of the price mechanism.

4 State the two types of movement along the demand curve.

5 State the three levels at which demand is studied.

6 State two factors that would cause the demand for a product to increase.

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 7 State two factors that would cause the demand for a product to decrease. The factors must be different from
those stated in 6.

8 State the three levels at which supply is studied.

9 State two factors that would cause the supply for a product to increase.

10 State two factors that would cause the supply for a product to decrease. The factors must be different from those
stated in 9.

11 State two reasons (one demand-side and one supply-side) for an increase in the quantity of cars traded.

12 State the two types of market disequilibrium.

13 State five types of PED.

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14 State four determinants of PED.

15 State five types of PES.

16 State four determinants of PES.

17 State seven causes of market failure.

18 State two forms of price controls the government can use.

19 State seven government microeconomic policy measures.

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Worksheet 3: Using economic terms
Explain the difference between the following economic statements. The first one has been completed for you.

Section 3: Microeconomic decision makers

1 a) Worker A has a high degree of occupational mobility.
b) Worker B has a high degree of geographical mobility.

Example: Worker A has transferable skills to take up a job in a different industry, e.g. a bank
employee can take up a job in public administration, while Worker B can commute or relocate to
a different region/country to do the same job.

2 a) Money acts as a store of value.

b) Money needs to possess durability.

3 a) The central bank is a lender of last resort.

b) Commercial banks can lend to individuals and firms.

4 a) High-income households spend a larger total amount of their income.

b) High-income households spend a smaller proportion of their income.

5 a) Interest rate is the cost of borrowing money.

b) Interest rate is the reward for saving.

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 6 a) An increase in the wages of dentists will cause a contraction of the demand for dentists.
b) An increase in the wages of dentists will cause a decrease in the supply of workers in related occupations.

7 a) Division of labour increases productivity.

b) Specialisation increases total output.

8 a) An increase in unemployment reduces the bargaining power of trade unions.

b) Trade unions can use collective bargaining to prevent unemployment.

9 a) Horizontal mergers can reduce competition.

b) Vertical backward mergers can limit access of competitors to important sources of raw materials.

10 a) Internal economies of scale occur as a result of the growth of the firm.

b) External economies of scale occur as a result of the growth of the industry.

11 a) A firm increases production.

b) A firm increases productivity.

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12 a) Firm A employs more workers than Firm B.
b) Firm B is labour-intensive.

13 a) A variable interest on a loan is a fixed cost.

b) A capital cost for purchasing a machine is also a fixed cost.

14 a) Total fixed costs don’t change as output increases in the short run.
b) Average fixed cost falls as output increases in the short run.

15 a) Firm A is a price-taker.
b) Firm B is a price-maker.

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Worksheet 4: Formulas list
Complete the list with the formula for each economic term

Economic term Formula

PED =

PES =

Labour productivity =

Total cost =

Total variable cost =

Average total cost =

Average variable cost =

Average fixed cost =

Total revenue =

Average revenue =

Profit =

Total tax revenue =

Total subsidy payment =

(real) GDP per head =

Labour force =

Unemployment rate =

Weighted price index =

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Worksheet 5: Percentage changes
Economists are usually interested in relative rather than absolute changes.

If the price of 1 kilogram of apples increases from $4 to $6, this is a $2 increase in price, which is not very informative.

The price of 1 kilogram of dragon fruit may have increased from $20 to $25 at the same time, so you might think the
$5 increase in price affects you more than the $2 increase in price of apples, other things being equal.

Using the formula for percentage changes below, you can prove if this is really the case.
(New value – Original value)
% change = × 100
Original value

$6 – $4
Thus, the percentage change in the price of apples would be: × 100 = +50%
$4

$25 – $20
And for dragon fruit the percentage change would be: × 100 = +25%
$20

The increase in the price of apples is greater in percentage terms, although they remain cheaper than dragon fruits
($6 vs. $25).

Now apply the formula for percentage changes to the examples below and state which product experiences a greater
percentage change in price. Mind the direction of the change! Some of the prices below decrease!

Example 1:
The price of an airplane ticket increased from $75 to $100.
Calculation:

( – )
× =

The price of a bus ticket increased from $3 to $6.

Calculation:

( – )
× =

Which product experiences a greater percentage change in price?

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Example 2:
The tuition fee for a university course increased from $10 000 to $12 000.
Calculation:

( – )
× =

The rent for an apartment increased from $400 to $500.

Calculation:

( – )
× =

Which product experiences a greater percentage change in price?

Example 3:
The price of an exotic holiday decreased from $750 to $500.
Calculation:

( – )
× =

The price of a car decreased from $4000 to $3500.

Calculation:

( – )
× =

Which product experiences a greater percentage change in price?

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Example 4:
The price of petrol increased from $1.50 to $1.75 per litre.
Calculation:

( – )
× =

The price of a taxi service increased from $2.50 to $2.75 per kilometre.
Calculation:

( – )
× =

Which product experiences a greater percentage change in price?

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Worksheet 7: Command words
Match the following command words to their explanations. Each command word can be used only once.
Describe Calculate Discuss State Analyse
Identify Explain Define Give

Command word Explanation and guidance

• examine in detail to show meaning, identify
elements and the relationship between them
• answer questions like how/why
• use linking devices such as ‘thus’, ‘therefore’, ‘as a
result’, ‘leading to’, ‘because’, ‘since’, etc.
• construct reasoned arguments by linking two or
more points together
• work out from given facts, figures or information
• include the unit of measurement if necessary
• mind the year / period referred to in the question
• write the formula first and then substitute
• give precise meaning
• keep your answer short and concise
• one sentence should be enough
• examples are not credited, unless the question
specifically asks you for one
• state the points of a topic / give characteristics and
main features
• outline rather than analyse
• write about issue(s) or topic(s) in depth in a
structured way
• such questions require longer, more detailed
answers
• answer must be two-sided
• include detailed analysis
• set out purposes or reasons / make the relationships
between things evident / provide why and/or how
and support with relevant evidence
• provide examples
• produce an answer from a given source or
recall / memory
• short answer required
• name/select/recognise
• short and specific answer required
• answers may have to come from a source material,
not your own ideas / knowledge
• no need to explain your answer
• express in clear terms
• no need to explain your answer

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