WGU D089 LATEST EXAM PRINCIPLES OF ECONOMICS EXAM QUESTIONS AND
CORRECT ANSWERS | LATEST VERSION | ALREADY GRADED A+ | JUST RELEASED
Question 1
What are factor payments?
A) The taxes a business remits to the local government
B) The subsidies provided by the state to support consumer spending
C) What the firm pays for the use of the factors of production
D) The dividends paid exclusively to corporate stockholders
E) The retail prices consumers pay for final goods and services
Correct Answer: C) What the firm pays for the use of the factors of production
Rationale: Factor payments are the compensation firms provide to resource owners in
exchange for productive inputs. These payments take the form of wages for labor, interest
for capital, rent for land, and profit for entrepreneurship.
Question 2
In economic theory, what is the direct result when human wants exceed the available productive
resources?
A) Absolute abundance
B) Scarcity
C) Hyperinflation
D) Stagflation
E) Market saturation
Correct Answer: B) Scarcity
Rationale: Scarcity is the fundamental economic problem that occurs because society has
unlimited human wants and needs while possessing finite, limited resources (land, labor,
capital, and entrepreneurship). This imbalance forces economic agents to make choices and
face trade-offs.
Question 3
If the inputs of production within an economy are currently underutilized (operating inside the
production possibilities frontier), is a decrease in the production of one good required when
increasing the production of another good to reach the frontier?
A) Yes, because opportunity cost is always positive along any curve
B) Yes, because the law of increasing costs applies at every level of output
C) No, because idle or inefficiently allocated resources can be put to work without sacrificing
existing output
D) No, but only if the country simultaneously engages in international trade
E) Yes, because all production movements require sacrificing consumer goods
Correct Answer: C) No, because idle or inefficiently allocated resources can be put to work
without sacrificing existing output
Rationale: When an economy operates inside its Production Possibilities Frontier (PPF),
resources are unemployed or underutilized. Moving from an interior point toward the
, 2
frontier represents an increase in efficiency; output of one or both goods can expand simply
by utilizing idle resources, without requiring a reduction in any other good.
Question 4
How is opportunity cost calculated between two competing goods on a production schedule?
A) By multiplying the total revenue of both goods by the average tax rate
B) By dividing the amount of a good you have given up by the amount of the good you have
gained
C) By subtracting the variable cost of the primary good from its fixed cost
D) By adding the monetary price of the alternative to its accounting profit
E) By dividing total explicit costs by total implicit costs
Correct Answer: B) By dividing the amount of a good you have given up by the amount of
the good you have gained
Rationale: Opportunity cost measures the trade-off of choosing one alternative over
another. Mathematically, it is determined by taking the quantity of the sacrificed good
(what is given up) and dividing it by the quantity of the chosen good obtained (what is
gained).
Question 5
How does opportunity cost appear along a straight, linear production possibilities frontier?
A) As continuously increasing
B) As continuously decreasing
C) As a constant
D) As zero at all production points
E) As indeterminate without market prices
Correct Answer: C) As a constant
Rationale: A straight-line (linear) PPF indicates that the trade-off ratio between the two
goods remains identical regardless of the level of output. This occurs when inputs are
equally adaptable and interchangeable in the production of both commodities, resulting in
a constant opportunity cost.
Question 6
What economic dynamic is illustrated along a bowed-out (concave to the origin) production
possibilities frontier as an economy produces more of one good?
A) Perfectly constant opportunity costs across all sectors
B) Decreasing opportunity costs due to economies of scale
C) Increasing opportunity costs because resources are not equally suited to producing both goods
D) A total collapse of consumer demand
E) The elimination of all scarcity
Correct Answer: C) Increasing opportunity costs because resources are not equally suited
to producing both goods
CORRECT ANSWERS | LATEST VERSION | ALREADY GRADED A+ | JUST RELEASED
Question 1
What are factor payments?
A) The taxes a business remits to the local government
B) The subsidies provided by the state to support consumer spending
C) What the firm pays for the use of the factors of production
D) The dividends paid exclusively to corporate stockholders
E) The retail prices consumers pay for final goods and services
Correct Answer: C) What the firm pays for the use of the factors of production
Rationale: Factor payments are the compensation firms provide to resource owners in
exchange for productive inputs. These payments take the form of wages for labor, interest
for capital, rent for land, and profit for entrepreneurship.
Question 2
In economic theory, what is the direct result when human wants exceed the available productive
resources?
A) Absolute abundance
B) Scarcity
C) Hyperinflation
D) Stagflation
E) Market saturation
Correct Answer: B) Scarcity
Rationale: Scarcity is the fundamental economic problem that occurs because society has
unlimited human wants and needs while possessing finite, limited resources (land, labor,
capital, and entrepreneurship). This imbalance forces economic agents to make choices and
face trade-offs.
Question 3
If the inputs of production within an economy are currently underutilized (operating inside the
production possibilities frontier), is a decrease in the production of one good required when
increasing the production of another good to reach the frontier?
A) Yes, because opportunity cost is always positive along any curve
B) Yes, because the law of increasing costs applies at every level of output
C) No, because idle or inefficiently allocated resources can be put to work without sacrificing
existing output
D) No, but only if the country simultaneously engages in international trade
E) Yes, because all production movements require sacrificing consumer goods
Correct Answer: C) No, because idle or inefficiently allocated resources can be put to work
without sacrificing existing output
Rationale: When an economy operates inside its Production Possibilities Frontier (PPF),
resources are unemployed or underutilized. Moving from an interior point toward the
, 2
frontier represents an increase in efficiency; output of one or both goods can expand simply
by utilizing idle resources, without requiring a reduction in any other good.
Question 4
How is opportunity cost calculated between two competing goods on a production schedule?
A) By multiplying the total revenue of both goods by the average tax rate
B) By dividing the amount of a good you have given up by the amount of the good you have
gained
C) By subtracting the variable cost of the primary good from its fixed cost
D) By adding the monetary price of the alternative to its accounting profit
E) By dividing total explicit costs by total implicit costs
Correct Answer: B) By dividing the amount of a good you have given up by the amount of
the good you have gained
Rationale: Opportunity cost measures the trade-off of choosing one alternative over
another. Mathematically, it is determined by taking the quantity of the sacrificed good
(what is given up) and dividing it by the quantity of the chosen good obtained (what is
gained).
Question 5
How does opportunity cost appear along a straight, linear production possibilities frontier?
A) As continuously increasing
B) As continuously decreasing
C) As a constant
D) As zero at all production points
E) As indeterminate without market prices
Correct Answer: C) As a constant
Rationale: A straight-line (linear) PPF indicates that the trade-off ratio between the two
goods remains identical regardless of the level of output. This occurs when inputs are
equally adaptable and interchangeable in the production of both commodities, resulting in
a constant opportunity cost.
Question 6
What economic dynamic is illustrated along a bowed-out (concave to the origin) production
possibilities frontier as an economy produces more of one good?
A) Perfectly constant opportunity costs across all sectors
B) Decreasing opportunity costs due to economies of scale
C) Increasing opportunity costs because resources are not equally suited to producing both goods
D) A total collapse of consumer demand
E) The elimination of all scarcity
Correct Answer: C) Increasing opportunity costs because resources are not equally suited
to producing both goods
