WGU D089 PRINCIPLES OF ECONOMICS UPDATED EXAMS
SCRIPT QUESTIONS AND ANSWERS SURE A+
✔✔Positive Economics - ✔✔The study of economics concerned with what is and what
will happen if a course of action is taken or not taken.
✔✔Normative Economics - ✔✔The study of economics with what is and what will
happen if a course of action is taken or not taken.
✔✔Economic Models - ✔✔A simplified version of reality that allows people to observe,
understand and make predictions about economic behavior.
✔✔Economic Indicators - ✔✔A statistic about an economic activity.
✔✔Circular Flow Model - ✔✔An economic model that shows the flow of money and
goods through the economy. The most common form of this model shows the circular
flow of income between the household sector and the business sector.
✔✔Human Capital - ✔✔The accumulated skills and education of workers.
✔✔Research and Development - ✔✔Term commonly used to describe the activities
undertaken by firms and other entities such as individual entrepreneurs to create new or
improved products and processes.
✔✔Partnership - ✔✔A legal form of business operation between two or more individuals
who share management and profits.
✔✔Merger - ✔✔Combining two companies into a single larger company
✔✔Factors of Production - ✔✔Describes the inputs used in the production of goods or
services to make an economic profit.
✔✔Financial Capital - ✔✔Most commonly refers to assets needed by a company to
provide goods or services as measured in terms of money value.
✔✔Profit (Q/A) - ✔✔What is the payment of production for entrepreneurship?
✔✔Rent (Q/A) - ✔✔What is the payment of production for the use of land or natural
resources?
✔✔Interest (Q/A) - ✔✔What is the payment for the use of capital?
✔✔Wages (Q/A) - ✔✔What are the payments for the use of labor?
,✔✔Efficiently - ✔✔Producing the maximum amount of goods and services possible
given available resources and technology.
✔✔Production Possibilities Frontier - ✔✔A graphical representation used by economists
to show the alternative communications of two goods or services that an economy can
produce with the given resources and technology when the resources are fully and
efficiently used at a given point in time.
✔✔Budget Constraint - ✔✔Represents all the combinations of goods and services that
a consumer may purchase given current prices within his or her given income.
✔✔Opportunity Set - ✔✔All possible combinations of consumption that someone can
afford given the prices of goods and the individuals income.
✔✔Homogeneous - ✔✔A resource having one form of set of skills.
✔✔Heterogeneous - ✔✔A resource having two different forms of skills.
✔✔Capital Goods - ✔✔Goods that are used in producing other goods rather than being
bought by consumers.
✔✔Consumer Goods - ✔✔Goods bought and used by consumers.
✔✔Law of Increasing Opportunity Costs - ✔✔Once all factors of production are at
maximum output and efficiency, producing more of one good requires giving up an
increasing amount of the other good.
✔✔Underutilizing - ✔✔The condition in which economic resources are not being used to
their full potential
✔✔Inefficient - ✔✔The underemployment of any of the four economic resources.
✔✔Constant Opportunity Cost of Production (Q/A) - ✔✔The upward (positive) slope of
the production possibility frontier represents what characteristic?
✔✔Scarcity (Q/A) - ✔✔The downward (Negative ) slope of the production possibility
frontier represents what characteristic?
✔✔The Law of Diminishing Returns - ✔✔The point where the level of profits or benefits
gained is less than the amount of money or energy invested.
✔✔The Law of Diminishing Returns (Q/A) - ✔✔The outward bending shape of the
production possibilities frontier represents what characteristic?
, ✔✔Price - ✔✔The amount of money expected, required or given in payment for
something.
✔✔Supply - ✔✔A fundamental economic concept that describes the total amount of a
specific good or service that is available to consumers.
✔✔Demand - ✔✔Consumers willingness and ability to consume a given good.
✔✔Equilibrium Price - ✔✔The price where the quantity demanded is equal to the
quantity supplied.
✔✔Demand Elasticity - ✔✔How responsive the quantity demanded is to a change in
percentage terms.
✔✔Quantity Demanded - ✔✔Total number of units purchased at a specific price.
✔✔Demand Schedule - ✔✔A chart that shows the number of goods or services
demanded at specific prices.
✔✔Law of Demand - ✔✔The common relationship that a higher price leads to a lower
quantity demanded of a certain good or service and a lower price leads to a higher
quantity demanded while all other variables are held constant.
✔✔Quantity Supplied - ✔✔The quantity of a commodity that producers are willing to sell
at a particular price at a particular point of time.
✔✔Excess Supply - ✔✔At the existing price the quantity supplied exceeds that quantity
demanded also called a surplus.
✔✔Excess Demand - ✔✔At the existing price the quantity demanded exceeds the
quantity supplied also called shortage.
✔✔Elasticity - ✔✔An economics concept that measures responsiveness of one variable
to changes in another variable.
✔✔Price Elasticity - ✔✔An economic measure of the changes in the quantity demanded
or purchased of a product in relation to its price change
✔✔Price Elasticity of Demand - ✔✔The responsiveness of the quantity demanded to a
change in price, in percentage terms, calculated by taking the percentage change in the
quantity demanded divided by the percentage change in price.
SCRIPT QUESTIONS AND ANSWERS SURE A+
✔✔Positive Economics - ✔✔The study of economics concerned with what is and what
will happen if a course of action is taken or not taken.
✔✔Normative Economics - ✔✔The study of economics with what is and what will
happen if a course of action is taken or not taken.
✔✔Economic Models - ✔✔A simplified version of reality that allows people to observe,
understand and make predictions about economic behavior.
✔✔Economic Indicators - ✔✔A statistic about an economic activity.
✔✔Circular Flow Model - ✔✔An economic model that shows the flow of money and
goods through the economy. The most common form of this model shows the circular
flow of income between the household sector and the business sector.
✔✔Human Capital - ✔✔The accumulated skills and education of workers.
✔✔Research and Development - ✔✔Term commonly used to describe the activities
undertaken by firms and other entities such as individual entrepreneurs to create new or
improved products and processes.
✔✔Partnership - ✔✔A legal form of business operation between two or more individuals
who share management and profits.
✔✔Merger - ✔✔Combining two companies into a single larger company
✔✔Factors of Production - ✔✔Describes the inputs used in the production of goods or
services to make an economic profit.
✔✔Financial Capital - ✔✔Most commonly refers to assets needed by a company to
provide goods or services as measured in terms of money value.
✔✔Profit (Q/A) - ✔✔What is the payment of production for entrepreneurship?
✔✔Rent (Q/A) - ✔✔What is the payment of production for the use of land or natural
resources?
✔✔Interest (Q/A) - ✔✔What is the payment for the use of capital?
✔✔Wages (Q/A) - ✔✔What are the payments for the use of labor?
,✔✔Efficiently - ✔✔Producing the maximum amount of goods and services possible
given available resources and technology.
✔✔Production Possibilities Frontier - ✔✔A graphical representation used by economists
to show the alternative communications of two goods or services that an economy can
produce with the given resources and technology when the resources are fully and
efficiently used at a given point in time.
✔✔Budget Constraint - ✔✔Represents all the combinations of goods and services that
a consumer may purchase given current prices within his or her given income.
✔✔Opportunity Set - ✔✔All possible combinations of consumption that someone can
afford given the prices of goods and the individuals income.
✔✔Homogeneous - ✔✔A resource having one form of set of skills.
✔✔Heterogeneous - ✔✔A resource having two different forms of skills.
✔✔Capital Goods - ✔✔Goods that are used in producing other goods rather than being
bought by consumers.
✔✔Consumer Goods - ✔✔Goods bought and used by consumers.
✔✔Law of Increasing Opportunity Costs - ✔✔Once all factors of production are at
maximum output and efficiency, producing more of one good requires giving up an
increasing amount of the other good.
✔✔Underutilizing - ✔✔The condition in which economic resources are not being used to
their full potential
✔✔Inefficient - ✔✔The underemployment of any of the four economic resources.
✔✔Constant Opportunity Cost of Production (Q/A) - ✔✔The upward (positive) slope of
the production possibility frontier represents what characteristic?
✔✔Scarcity (Q/A) - ✔✔The downward (Negative ) slope of the production possibility
frontier represents what characteristic?
✔✔The Law of Diminishing Returns - ✔✔The point where the level of profits or benefits
gained is less than the amount of money or energy invested.
✔✔The Law of Diminishing Returns (Q/A) - ✔✔The outward bending shape of the
production possibilities frontier represents what characteristic?
, ✔✔Price - ✔✔The amount of money expected, required or given in payment for
something.
✔✔Supply - ✔✔A fundamental economic concept that describes the total amount of a
specific good or service that is available to consumers.
✔✔Demand - ✔✔Consumers willingness and ability to consume a given good.
✔✔Equilibrium Price - ✔✔The price where the quantity demanded is equal to the
quantity supplied.
✔✔Demand Elasticity - ✔✔How responsive the quantity demanded is to a change in
percentage terms.
✔✔Quantity Demanded - ✔✔Total number of units purchased at a specific price.
✔✔Demand Schedule - ✔✔A chart that shows the number of goods or services
demanded at specific prices.
✔✔Law of Demand - ✔✔The common relationship that a higher price leads to a lower
quantity demanded of a certain good or service and a lower price leads to a higher
quantity demanded while all other variables are held constant.
✔✔Quantity Supplied - ✔✔The quantity of a commodity that producers are willing to sell
at a particular price at a particular point of time.
✔✔Excess Supply - ✔✔At the existing price the quantity supplied exceeds that quantity
demanded also called a surplus.
✔✔Excess Demand - ✔✔At the existing price the quantity demanded exceeds the
quantity supplied also called shortage.
✔✔Elasticity - ✔✔An economics concept that measures responsiveness of one variable
to changes in another variable.
✔✔Price Elasticity - ✔✔An economic measure of the changes in the quantity demanded
or purchased of a product in relation to its price change
✔✔Price Elasticity of Demand - ✔✔The responsiveness of the quantity demanded to a
change in price, in percentage terms, calculated by taking the percentage change in the
quantity demanded divided by the percentage change in price.
