I85PREP
⌘ K
Lower Saxony BG Volkswirtschaft study materials
Lower Saxony BG Volkswirtschaft study resources

Lower Saxony BG Volkswirtschaft practice questions

One question at a time. Build your Lower Saxony BG Volkswirtschaft understanding.

First 50 of 190 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Scarcity, markets and consumer decisions

In standard national accounting, which three production factors are typically distinguished in introductory Volkswirtschaft teaching?

  1. Labour, capital, and land/natural resources (sometimes with entrepreneurship as a fourth) Correct answer.
  2. Only patents, trademarks, and brand logos
  3. Only Bitcoin, gold, and foreign currency reserves
  4. Only parliamentary seats, court rulings, and treaties

Explanation

Classical/introductory teaching distinguishes Arbeit, Kapital, and Boden/natürliche Ressourcen (often with Unternehmerische Tätigkeit as a further factor).

Question 2Scarcity, markets and consumer decisions

The 'ökonomisches Prinzip' (economic principle) states that decision-makers should:

  1. Achieve a given goal with minimal means, or maximise results from given means Correct answer.
  2. Always spend the entire budget regardless of outcomes
  3. Ignore scarcity and treat all goods as free
  4. Replace all market prices with random lotteries

Explanation

The economic principle (Minimum- or Maximumprinzip) formalises rational use of scarce resources: either minimise input for a fixed output or maximise output from fixed input.

Question 3Scarcity, markets and consumer decisions

Which unemployment type is caused by a temporary mismatch while workers search for or transition between jobs?

  1. Frictional unemployment Correct answer.
  2. Cyclical unemployment only, with no search component
  3. Structural unemployment caused solely by obsolete skills and regional mismatches
  4. Seasonal unemployment caused only by weather in agriculture/tourism

Explanation

Frictional unemployment arises from normal job search and transitions; structural reflects deeper skill/location mismatches; cyclical tracks demand shortfalls; seasonal follows recurring calendar patterns.

Question 4Macroeconomics, finance and policy

Nominal GDP rises 5% while the GDP deflator rises 2%. Approximate real GDP growth is:

  1. About 3% Correct answer.
  2. About 7%
  3. About 2.5%
  4. About 10%

Explanation

Real growth ≈ nominal growth − inflation (deflator growth) ≈ 5% − 2% = 3%.

Question 5Macroeconomics, finance and policy

On a Lorenz curve diagram, greater inequality appears as:

  1. A Lorenz curve bowed farther from the 45-degree line of equality Correct answer.
  2. A Lorenz curve identical to the 45-degree line
  3. A vertical line at zero population
  4. A circle with no axes

Explanation

The farther the Lorenz curve from the diagonal, the more unequal the distribution; Gini relates to the area between them.

Question 6Macroeconomics, finance and policy

If the bottom 40% of households receive 10% of total income, which statement is true?

  1. Distribution is unequal relative to perfect equality (where they would receive 40%) Correct answer.
  2. Distribution must be perfectly equal
  3. Gini must be exactly zero
  4. GDP must be negative

Explanation

Under equality the bottom 40% would receive 40%; receiving only 10% shows inequality (Lorenz interpretation).

Question 7Scarcity, markets and consumer decisions

In the perfect-competition market model, a simultaneous rise in demand and supply has what effect on equilibrium quantity?

  1. Equilibrium quantity rises; the price effect is ambiguous without magnitudes Correct answer.
  2. Equilibrium quantity always falls
  3. Price and quantity both become undefined
  4. Quantity is unchanged in all cases

Explanation

Both curves shifting right raise quantity; price rises if demand shift dominates and falls if supply shift dominates.

Question 8Macroeconomics, finance and policy

Deflation means:

  1. A sustained decline in the general price level Correct answer.
  2. Any single relative price falling while the index rises
  3. Always identical to disinflation
  4. A rise in the money supply by definition

Explanation

Deflation = falling price level; disinflation = falling inflation rate while prices may still rise.

Question 9Macroeconomics, finance and policy

A price index was 200 last year and 210 this year. Inflation is:

  1. 5% Correct answer.
  2. 10%
  3. 210%
  4. 4.76% approximately if computed from 210 as base incorrectly as (210-200)/210

Explanation

(210−200)/200 = 5%. (Using 210 as base yields ~4.76%, which is the wrong base for a standard year-on-year rate from last year's index.)

Question 10International trade and development

Country A: 1 cloth costs 2 wine forgone; Country B: 1 cloth costs 4 wine forgone. Who has comparative advantage in cloth?

  1. Country A (lower opportunity cost of cloth) Correct answer.
  2. Country B
  3. Neither, because absolute figures are missing
  4. Both equally, because 2≠4 is irrelevant

Explanation

Lower opportunity cost ⇒ comparative advantage: A gives up only 2 wine per cloth vs B's 4.

Question 11Firms, business and labor

In a supplied accrual model, a firm completes a service and invoices the customer, who will pay next month. What can occur this month?

  1. Revenue and a receivable can arise before the cash is collected Correct answer.
  2. Cash must increase by the invoice amount immediately
  3. The customer’s later payment must create the same sales revenue a second time
  4. No revenue can ever arise from a service sold on credit

Explanation

The model separates earning revenue from collecting payment. Completing and invoicing the service can create a receivable now, while the later collection changes cash and settles that receivable rather than automatically recording the sale again.

Question 12Firms, business and labor

A single-product model supplies price 30 per unit, variable cost 18 per unit and fixed cost 1,200 for the period. With adequate demand, what break-even quantity follows?

  1. 40 units
  2. 100 units Correct answer.
  3. 67 units
  4. 120 units

Explanation

Each unit contributes 30 minus 18, or 12, toward fixed cost. Dividing 1,200 by 12 gives 100 units, where total contribution exactly covers the stated fixed costs under this simple cost model.

Question 13Firms, business and labor

A balance-sheet exercise gives current assets 60 and current liabilities 40, in the same currency unit. What current ratio follows?

  1. 20
  2. 0.667
  3. 1.5 Correct answer.
  4. 2.5

Explanation

The current ratio divides current assets by current liabilities. Sixty divided by forty equals 1.5; the difference 20 is working capital rather than the ratio, and this ratio alone does not establish every future cash payment.

Question 14Firms, business and labor

A model reports current assets 90 and current liabilities 55. What working-capital amount is obtained by the supplied assets-minus-liabilities definition?

  1. 145
  2. 1.64
  3. 55
  4. 35 Correct answer.

Explanation

Working capital under this definition is 90 minus 55, giving 35 in the stated currency unit. A ratio of the balances and their sum measure different quantities and cannot replace the requested difference.

Question 15Firms, business and labor

An owner earns accounting profit 35,000. The exercise supplies an unrecorded next-best employment opportunity worth 24,000 and no other implicit costs. What economic profit follows?

  1. 11,000 Correct answer.
  2. 35,000
  3. 59,000
  4. 24,000

Explanation

Economic profit deducts the specified implicit opportunity cost as well as costs already included in accounting profit. Thirty-five thousand minus twenty-four thousand gives eleven thousand under the stated single-implicit-cost model.

Question 16Firms, business and labor

A production record shows 120 finished units produced in 15 labor hours. What labor productivity does output per labor hour measure here?

  1. 0.125 units per hour
  2. 8 units per hour Correct answer.
  3. 135 units per hour
  4. 1,800 units per hour

Explanation

Output per labor hour divides the 120 units by 15 hours, yielding 8 units per hour. This is a physical productivity measure, not a wage, headcount or monetary profit calculation.

Question 17Firms, business and labor

In a competitive benchmark, training raises workers’ marginal value product while the wage and other conditions remain fixed. What labor-demand effect is consistent with that change?

  1. Labor demand must fall solely because workers are more productive
  2. The labor supply curve must become vertical
  3. The employer can find additional hiring worthwhile at the unchanged wage Correct answer.
  4. Training necessarily eliminates every unemployed worker

Explanation

Higher marginal value product can make additional employment profitable when the wage and other relevant conditions are held fixed. This is a labor-demand mechanism, not a guarantee about every worker or a forced change in labor supply.

Question 18Firms, business and labor

In a monopsony model, hiring an extra worker requires a higher wage schedule, so marginal labor expenditure exceeds the wage. Which hiring comparison is appropriate?

  1. Always equate the wage with average product only
  2. Ignore the expenditure on previously employed workers when the schedule requires a common higher wage
  3. Choose the largest workforce regardless of its contribution
  4. Compare marginal revenue product with marginal labor expenditure Correct answer.

Explanation

A monopsonist considers the additional total expenditure caused by another worker, which can exceed that worker’s wage when existing workers also receive a higher wage. The marginal hiring condition therefore compares marginal revenue product with marginal labor expenditure.

Question 19Firms, business and labor

A worker leaves one job and temporarily searches for a better-matched job while relevant vacancies exist and overall demand is healthy. Which unemployment concept best fits this description?

  1. Frictional unemployment Correct answer.
  2. Cyclical unemployment caused by an economy-wide slump
  3. Structural unemployment necessarily caused by obsolete skills
  4. A permanent absence of all labor-market vacancies

Explanation

Frictional unemployment describes a temporary matching and search process between jobs. The prompt supplies available relevant vacancies and healthy aggregate demand, so it does not establish an economy-wide recession or obsolete skills.

Question 20Firms, business and labor

A manager’s bonus rewards sales volume alone. The manager chooses extra sales that reduce the firm’s total profit. Which governance issue is illustrated?

  1. Proof that sales revenue and profit are identical
  2. An incentive conflict between the manager’s rewarded measure and the owners’ profit objective Correct answer.
  3. Proof that every performance bonus is ineffective
  4. A guarantee that higher volume lowers variable cost per unit

Explanation

The rewarded sales measure and the stated profit objective point toward different actions in this scenario. This illustrates a principal-agent incentive problem; it does not prove that every bonus scheme fails or that revenue equals profit.

Question 21Quantitative economic analysis

For the four observations 10, 12, 14 and 14, what is the arithmetic mean?

  1. 13
  2. 14
  3. 12.5 Correct answer.
  4. 50

Explanation

The arithmetic mean is the sum divided by the number of observations. The sum is 50 and there are four values, so 50 divided by 4 equals 12.5; the median and mode are different summaries.

Question 22Quantitative economic analysis

A fixed basket contains two units of A and one unit of B. Base prices are A=3,B=4; new prices are A=4,B=5. What price index results with base 100?

  1. 125
  2. 30
  3. 100
  4. 130 Correct answer.

Explanation

The fixed basket costs 2 times 3 plus 4, or 10, at base prices and 2 times 4 plus 5, or 13, at new prices. The price index is 13 divided by 10 times 100, giving 130 under the stated basket model.

Question 23Quantitative economic analysis

A price index rises from 125 to 130. What percentage increase is measured relative to 125?

  1. 4 percent Correct answer.
  2. 5 percent
  3. 0.04 percent
  4. 104 percent

Explanation

The increase is five index points. Dividing five by the original level 125 gives 0.04, or 4 percent; an index-point change is not automatically an equal percentage change.

Question 24Quantitative economic analysis

Price rises from 10 to 12 while quantity falls from 50 to 40. Using midpoint percentage changes, what is the approximate demand elasticity?

  1. −0.83
  2. −1.22 Correct answer.
  3. −0.20
  4. +1.22

Explanation

The midpoint quantity change is minus 10 divided by 45, while the midpoint price change is 2 divided by 11. Dividing these gives approximately minus 1.22, a unit-free arc elasticity for the supplied endpoints.

Question 25Quantitative economic analysis

A sample has n=5 and the sum of squared deviations from its sample mean is 36. Using s²=sum of squared deviations/(n−1), what sample variance follows?

  1. 7.2
  2. 6
  3. 9 Correct answer.
  4. 36

Explanation

The supplied sample-variance formula divides 36 by 5 minus 1, or 4. The result is 9; dividing by 5 would instead use a different denominator and would not implement the formula given in the question.

Question 26Quantitative economic analysis

An observational dataset has a correlation coefficient of+0.8 between two measured variables. Which conclusion is justified by that coefficient alone?

  1. An 80 percent increase in one variable is guaranteed to cause an 80 percent rise in the other
  2. The variables must have a negative linear association
  3. Every individual observation lies exactly on one straight line
  4. A positive linear association is present, without proof of causation Correct answer.

Explanation

A positive correlation coefficient indicates positive linear association in the observed data. It does not establish an intervention effect, an 80 percent causal response or a perfect straight-line fit, and other variables or selection may explain the association.

Question 27Quantitative economic analysis

A supplied fitted relationship is Q=100−2 P. What change in predicted Q occurs when P moves from 5 to 8 within this model?

  1. A decrease of 6 units Correct answer.
  2. An increase of 6 units
  3. A decrease of 3 units
  4. No change in predicted Q

Explanation

The model predicts 90 units atP=5 and 84 units atP=8, so the predicted change is minus 6. This is a calculation within the supplied fitted relationship and does not by itself establish a causal price effect from observational data.

Question 28Quantitative economic analysis

A voluntary online survey about bus use receives many responses from one neighborhood but few from areas with poor internet access. What concern remains despite the large response count?

  1. A large count automatically removes every sampling bias
  2. Selection and coverage bias can limit generalization to all residents Correct answer.
  3. The responses necessarily form a complete census of all residents
  4. The sample mean must equal the population mean exactly

Explanation

A large number of responses does not automatically correct systematic undercoverage or self-selection. If access and participation differ across relevant groups, the sample can give a distorted picture of the population even with many observations.

Question 29Quantitative economic analysis

An interval exercise supplies estimate 100,standard error 5 and critical value 2. Using estimate±critical value×standard error, what bounds follow?

  1. 95 and 105
  2. 98 and 102
  3. 90 and 110 Correct answer.
  4. 80 and 120

Explanation

The margin is the critical value 2 times the standard error 5, giving 10. Subtracting and adding 10 to 100 gives 90 and 110; interpretation still depends on the statistical model and confidence procedure supplied.

Question 30Quantitative economic analysis

Nominal spending is 132 in a period with a relevant price index 110 and base 100. What corresponding real amount follows from nominal/index×100?

  1. 145.2
  2. 22
  3. 110
  4. 120 Correct answer.

Explanation

Applying the supplied normalization gives 132 divided by 110 times 100, equal to 120 base-price units. Multiplying by the price index would move in the opposite direction and would not deflate the nominal amount.

Question 31Scarcity, markets and consumer decisions

In economics, what does the term 'scarcity' mean?

  1. Resources are limited relative to the unlimited wants of people Correct answer.
  2. A good is temporarily out of stock in a shop
  3. Some people are poorer than others in the same country
  4. Total production in an economy has fallen for two quarters

Explanation

Scarcity is the fundamental economic problem: productive resources are finite while human wants are effectively unlimited, so choices must be made. It applies to every society, rich or poor, and is not the same as poverty or a temporary shortage.

Question 32Scarcity, markets and consumer decisions

A student has €20 and must choose between a cinema ticket costing €15 and a concert ticket costing €20. What is the opportunity cost of buying the concert ticket?

  1. The concert ticket itself
  2. The cinema ticket she gives up Correct answer.
  3. €20 in cash
  4. Nothing, because she wanted the concert most

Explanation

Opportunity cost is the value of the next best alternative forgone when a choice is made. By spending the €20 on the concert, she gives up the cinema ticket, which is the best alternative she could otherwise have chosen.

Question 33Scarcity, markets and consumer decisions

Which statement best describes the economic problem of 'what to produce'?

  1. Deciding whether prices should be set by firms or by government
  2. Deciding how income and output are shared among members of society
  3. Deciding which combination of goods and services should be produced with limited resources Correct answer.
  4. Deciding which production methods use the least labour per unit

Explanation

Every economy must answer three basic questions, and 'what to produce' concerns the mix of goods and services, such as capital versus consumer goods, that limited resources will be devoted to. The other questions of 'how' and 'for whom' concern technique and distribution.

Question 34Scarcity, markets and consumer decisions

Which of the following is classified as a factor of production called 'capital'?

  1. A worker's skill acquired through training
  2. A delivery van used by a bakery Correct answer.
  3. Iron ore still in the ground
  4. Money saved in a bank account

Explanation

In economics, capital means man-made goods used to produce other goods and services, such as machinery, tools and vehicles. A delivery van fits this definition because it is produced and then used in the production process.

Question 35Scarcity, markets and consumer decisions

A production possibility frontier shows the maximum output of two goods an economy can produce. What does a point inside the frontier represent?

  1. A combination that requires an improvement in technology
  2. An unattainable combination given current resources
  3. A combination where the opportunity cost is zero
  4. A combination using resources inefficiently or with unemployment Correct answer.

Explanation

Points on the curve are productively efficient, while points inside it show that some resources are idle or used inefficiently, so more of one good could be produced without giving up the other. Points outside the frontier are unattainable with current resources and technology.

Question 36Scarcity, markets and consumer decisions

In the market for oranges, which of the following would cause a movement along the demand curve rather than a shift of the demand curve?

  1. An increase in consumers' incomes
  2. A fall in the price of oranges Correct answer.
  3. A new health report praising orange consumption
  4. A rise in the price of tangerines, a substitute

Explanation

A change in the good's own price changes quantity demanded and is shown as a movement along a given demand curve. The other events change demand at every price, shifting the whole curve.

Question 37Scarcity, markets and consumer decisions

The supply curve for a product slopes upward because, as output rises,

  1. the extra cost of producing each additional unit generally rises Correct answer.
  2. technology always improves with larger output
  3. firms can charge higher prices for each unit
  4. consumers are willing to pay less for additional units

Explanation

An upward-sloping supply curve reflects increasing marginal cost: producing more requires attracting resources away from other uses, raising unit costs. Firms therefore need a higher price to supply larger quantities.

Question 38Scarcity, markets and consumer decisions

A market is in equilibrium when, at the prevailing price,

  1. quantity demanded exceeds quantity supplied
  2. quantity demanded equals quantity supplied Correct answer.
  3. the government has fixed a maximum price
  4. quantity supplied exceeds quantity demanded

Explanation

Equilibrium occurs where the quantity buyers wish to purchase equals the quantity sellers wish to sell, so there is no pressure for the price to change. Any mismatch creates a shortage or surplus that moves price.

Question 39Scarcity, markets and consumer decisions

If the price of a good is set above the equilibrium price, the immediate result in the market is

  1. no change, because the market always clears
  2. a shortage, because demand rises
  3. a surplus, because demand falls to zero
  4. a surplus, because quantity supplied exceeds quantity demanded Correct answer.

Explanation

At a price above equilibrium, the quantity supplied is greater than the quantity demanded, creating excess supply (a surplus). Sellers then tend to cut prices to clear unsold stock.

Question 40Scarcity, markets and consumer decisions

Which of the following is most likely to shift the supply curve of bread to the left?

  1. A rise in consumers' incomes
  2. A decrease in the price of bread
  3. An increase in the price of flour Correct answer.
  4. A fall in the wage paid to bakery workers

Explanation

Flour is an input in bread production, so a higher input price raises costs and reduces supply at every price, shifting supply left. The other events affect costs in the opposite direction or affect demand or quantity supplied.

Question 41Scarcity, markets and consumer decisions

A consumer's demand for a good is price elastic. If the price of the good falls, what happens to the total expenditure on the good?

  1. It stays unchanged, because price and quantity move in opposite directions.
  2. It falls, because quantity demanded decreases when price falls.
  3. It falls, because the percentage increase in quantity demanded exceeds the percentage fall in price.
  4. It rises, because the percentage increase in quantity demanded exceeds the percentage fall in price. Correct answer.

Explanation

When demand is elastic, the elasticity coefficient exceeds one in absolute value, so the proportional rise in quantity demanded outweighs the proportional fall in price. Total expenditure, price times quantity, therefore increases. This is the standard total-revenue test for elastic demand.

Question 42Scarcity, markets and consumer decisions

Which value of the price elasticity of demand (absolute value) corresponds to perfectly inelastic demand?

  1. Infinity
  2. Zero Correct answer.
  3. One
  4. Between zero and one

Explanation

Perfectly inelastic demand means quantity demanded does not respond at all to a price change, so the elasticity coefficient equals zero. The demand curve is vertical. Any positive value implies some responsiveness.

Question 43Scarcity, markets and consumer decisions

The price of a product rises by 10 per cent and quantity demanded falls by 25 per cent. What is the price elasticity of demand (absolute value) and how is demand classified?

  1. 2.5, elastic Correct answer.
  2. 0.4, elastic
  3. 2.5, inelastic
  4. 0.4, inelastic

Explanation

Elasticity equals the percentage change in quantity demanded divided by the percentage change in price, so 25 divided by 10 gives 2.5. Because the coefficient exceeds one, demand is elastic. The absolute value is used because the negative sign only reflects the inverse relationship.

Question 44Scarcity, markets and consumer decisions

A consumer spends a fixed proportion of income on a good regardless of its price. Which statement best describes this demand?

  1. It is perfectly elastic, so quantity is infinitely responsive.
  2. It is inelastic but not perfectly inelastic, so expenditure rises with price.
  3. It has unit price elasticity, so expenditure on the good is constant. Correct answer.
  4. It is perfectly inelastic, so quantity is unchanged.

Explanation

If expenditure on the good stays constant when price changes, the percentage change in quantity exactly offsets the percentage change in price. That is the definition of unit elasticity. Constant expenditure is the hallmark of unit-elastic demand.

Question 45Scarcity, markets and consumer decisions

Which factor is most likely to make the demand for a particular brand of coffee more price elastic?

  1. The good being a necessity with no substitutes
  2. A short time period since the price change
  3. The existence of many close substitute brands Correct answer.
  4. The good being a small share of the consumer's budget

Explanation

The availability of close substitutes is the most important determinant of price elasticity: consumers can switch brands easily when one brand's price rises. A small budget share, a short time horizon and a lack of substitutes all make demand less elastic.

Question 46Firms, business and labor

A firm's total fixed cost is €600 and total variable cost at 40 units of output is €1,400. What is the average total cost at this output level?

  1. €35
  2. €15
  3. €20
  4. €50 Correct answer.

Explanation

Average total cost equals total cost divided by output. Total cost is fixed plus variable cost, that is 600 + 1,400 = 2,000, and dividing by 40 units gives €50 per unit.

Question 47Firms, business and labor

In the short run, which cost is unaffected by changes in the level of output?

  1. Total variable cost
  2. Average variable cost
  3. Marginal cost
  4. Total fixed cost Correct answer.

Explanation

Fixed costs are incurred regardless of how much is produced because they relate to inputs that cannot be varied in the short run, such as rent on a factory. Marginal, average variable and total variable costs all change as output changes.

Question 48Firms, business and labor

The law of diminishing marginal returns predicts that, as more of a variable input is added to a fixed input, marginal product will eventually:

  1. rise at an increasing rate
  2. remain constant indefinitely
  3. fall Correct answer.
  4. become negative immediately

Explanation

With at least one input fixed, adding successive units of a variable input eventually yields smaller increments to output, so marginal product falls. It does not turn negative immediately, nor does it keep rising indefinitely.

Question 49Firms, business and labor

Which statement best describes the relationship between marginal cost and average total cost when average total cost is falling?

  1. Marginal cost lies above average total cost
  2. Marginal cost is zero
  3. Marginal cost lies below average total cost Correct answer.
  4. Marginal cost equals average total cost

Explanation

Average total cost falls whenever the cost of the next unit is less than the current average, so marginal cost must lie below average total cost. Marginal cost pulls the average toward itself, so it crosses ATC at the minimum point.

Question 50Firms, business and labor

A perfectly competitive firm faces a market price of €12 per unit and its marginal cost at the current output is €9. To maximise profit in the short run, the firm should:

  1. increase output while marginal cost remains below €12 Correct answer.
  2. shut down immediately
  3. raise its price above €12
  4. reduce output until marginal cost equals €12

Explanation

A price taker maximises profit where marginal cost equals price. Because marginal cost is below price, each extra unit adds more revenue than cost, so output should expand until MC rises to €12.