WGU D089 LATEST EXAM PRINCIPLES OF ECONOMICS
EXAM QUESTIONS AND CORRECT ANSWERS | LATEST
VERSION | ALREADY GRADED A+ | JUST RELEASED
Course
WGU D089
1. Which statement best describes scarcity?
A. Consumers have unlimited resources to satisfy every want
B. Resources are limited while human wants are unlimited
C. Governments control all economic resources
D. Businesses always have insufficient profits
Correct Answer: B
Rationale: Scarcity exists because productive resources are limited while human wants and
needs exceed the resources available to satisfy them. Scarcity forces individuals, businesses, and
governments to make choices.
2. A student chooses to spend Saturday studying instead of working a shift that would have
paid $120. What is the student's opportunity cost?
A. The cost of textbooks
B. The $120 wages forgone
C. The value of studying
D. The student's tuition
Correct Answer: B
Rationale: Opportunity cost is the value of the next-best alternative forgone. Because the
student gave up a $120 work opportunity, those forgone wages represent the opportunity cost
of studying.
3. Which economic principle explains why rational decision-makers compare additional
benefits with additional costs?
A. Marginal analysis
B. Comparative advantage
C. Monetary neutrality
D. Price discrimination
,Correct Answer: A
Rationale: Marginal analysis evaluates the additional benefit and additional cost associated with
one more unit of an activity. A rational decision generally occurs when the marginal benefit is at
least as large as the marginal cost.
4. A country can produce either 100 computers or 500 units of clothing using its available
resources. What does a production possibilities frontier primarily illustrate?
A. The relationship between inflation and unemployment
B. Trade-offs arising from limited resources
C. The government's tax rate
D. The quantity of money in circulation
Correct Answer: B
Rationale: A production possibilities frontier shows the maximum combinations of two goods
an economy can produce with given resources and technology. Moving toward more of one
good generally requires sacrificing some of another.
5. A point inside a production possibilities frontier generally indicates:
A. Productive efficiency
B. An unattainable combination
C. Underutilization of available resources
D. Maximum economic growth
Correct Answer: C
Rationale: A point inside the PPF is attainable but inefficient because the economy is not using
its resources fully or effectively.
6. Which change would most likely shift a country's production possibilities frontier outward?
A. Destruction of productive capital
B. A reduction in available labor
C. Technological improvement
D. Increased unemployment
Correct Answer: C
,Rationale: Improved technology can increase productivity, allowing an economy to produce
more output from its existing resources. This expands productive capacity and shifts the PPF
outward.
7. If the price of a product increases and all other factors remain constant, what does the law
of demand predict?
A. Quantity demanded will generally decrease
B. Quantity demanded will increase
C. Demand will necessarily shift right
D. Supply will necessarily decrease
Correct Answer: A
Rationale: The law of demand states that, holding other factors constant, a higher price
generally results in a lower quantity demanded.
8. Which event would shift the demand curve for a normal good to the right?
A. A decrease in consumer income
B. An increase in consumer income
C. A decrease in the good's price
D. An increase in production costs
Correct Answer: B
Rationale: For a normal good, higher consumer income increases demand. This shifts the entire
demand curve to the right rather than merely causing movement along the curve.
9. Coffee and tea are substitutes. If the price of coffee rises, what would most likely happen to
demand for tea?
A. Demand for tea decreases
B. Demand for tea increases
C. Supply of tea decreases
D. Quantity supplied of coffee increases
Correct Answer: B
, Rationale: When the price of one substitute rises, consumers may switch to the alternative.
Therefore, an increase in coffee's price can increase demand for tea.
10. Cars and gasoline are complementary goods. If gasoline prices rise substantially, what is
the likely effect on demand for gasoline-powered cars?
A. Demand increases
B. Demand decreases
C. Supply increases automatically
D. The price of cars must immediately fall to zero
Correct Answer: B
Rationale: Complements are goods commonly consumed together. Higher gasoline prices can
reduce consumers' willingness to purchase gasoline-powered vehicles, decreasing demand for
those vehicles.
11. Which factor causes a movement along the demand curve rather than a shift of the
demand curve?
A. Consumer income
B. Consumer preferences
C. Price of the good itself
D. Price of a substitute
Correct Answer: C
Rationale: A change in the good's own price causes a change in quantity demanded,
represented by movement along the existing demand curve. Other demand determinants can
shift the curve.
12. A technological improvement reduces the cost of producing smartphones. What will most
likely happen?
A. Supply decreases
B. Supply increases
C. Demand decreases
D. Demand becomes perfectly inelastic
Correct Answer: B
EXAM QUESTIONS AND CORRECT ANSWERS | LATEST
VERSION | ALREADY GRADED A+ | JUST RELEASED
Course
WGU D089
1. Which statement best describes scarcity?
A. Consumers have unlimited resources to satisfy every want
B. Resources are limited while human wants are unlimited
C. Governments control all economic resources
D. Businesses always have insufficient profits
Correct Answer: B
Rationale: Scarcity exists because productive resources are limited while human wants and
needs exceed the resources available to satisfy them. Scarcity forces individuals, businesses, and
governments to make choices.
2. A student chooses to spend Saturday studying instead of working a shift that would have
paid $120. What is the student's opportunity cost?
A. The cost of textbooks
B. The $120 wages forgone
C. The value of studying
D. The student's tuition
Correct Answer: B
Rationale: Opportunity cost is the value of the next-best alternative forgone. Because the
student gave up a $120 work opportunity, those forgone wages represent the opportunity cost
of studying.
3. Which economic principle explains why rational decision-makers compare additional
benefits with additional costs?
A. Marginal analysis
B. Comparative advantage
C. Monetary neutrality
D. Price discrimination
,Correct Answer: A
Rationale: Marginal analysis evaluates the additional benefit and additional cost associated with
one more unit of an activity. A rational decision generally occurs when the marginal benefit is at
least as large as the marginal cost.
4. A country can produce either 100 computers or 500 units of clothing using its available
resources. What does a production possibilities frontier primarily illustrate?
A. The relationship between inflation and unemployment
B. Trade-offs arising from limited resources
C. The government's tax rate
D. The quantity of money in circulation
Correct Answer: B
Rationale: A production possibilities frontier shows the maximum combinations of two goods
an economy can produce with given resources and technology. Moving toward more of one
good generally requires sacrificing some of another.
5. A point inside a production possibilities frontier generally indicates:
A. Productive efficiency
B. An unattainable combination
C. Underutilization of available resources
D. Maximum economic growth
Correct Answer: C
Rationale: A point inside the PPF is attainable but inefficient because the economy is not using
its resources fully or effectively.
6. Which change would most likely shift a country's production possibilities frontier outward?
A. Destruction of productive capital
B. A reduction in available labor
C. Technological improvement
D. Increased unemployment
Correct Answer: C
,Rationale: Improved technology can increase productivity, allowing an economy to produce
more output from its existing resources. This expands productive capacity and shifts the PPF
outward.
7. If the price of a product increases and all other factors remain constant, what does the law
of demand predict?
A. Quantity demanded will generally decrease
B. Quantity demanded will increase
C. Demand will necessarily shift right
D. Supply will necessarily decrease
Correct Answer: A
Rationale: The law of demand states that, holding other factors constant, a higher price
generally results in a lower quantity demanded.
8. Which event would shift the demand curve for a normal good to the right?
A. A decrease in consumer income
B. An increase in consumer income
C. A decrease in the good's price
D. An increase in production costs
Correct Answer: B
Rationale: For a normal good, higher consumer income increases demand. This shifts the entire
demand curve to the right rather than merely causing movement along the curve.
9. Coffee and tea are substitutes. If the price of coffee rises, what would most likely happen to
demand for tea?
A. Demand for tea decreases
B. Demand for tea increases
C. Supply of tea decreases
D. Quantity supplied of coffee increases
Correct Answer: B
, Rationale: When the price of one substitute rises, consumers may switch to the alternative.
Therefore, an increase in coffee's price can increase demand for tea.
10. Cars and gasoline are complementary goods. If gasoline prices rise substantially, what is
the likely effect on demand for gasoline-powered cars?
A. Demand increases
B. Demand decreases
C. Supply increases automatically
D. The price of cars must immediately fall to zero
Correct Answer: B
Rationale: Complements are goods commonly consumed together. Higher gasoline prices can
reduce consumers' willingness to purchase gasoline-powered vehicles, decreasing demand for
those vehicles.
11. Which factor causes a movement along the demand curve rather than a shift of the
demand curve?
A. Consumer income
B. Consumer preferences
C. Price of the good itself
D. Price of a substitute
Correct Answer: C
Rationale: A change in the good's own price causes a change in quantity demanded,
represented by movement along the existing demand curve. Other demand determinants can
shift the curve.
12. A technological improvement reduces the cost of producing smartphones. What will most
likely happen?
A. Supply decreases
B. Supply increases
C. Demand decreases
D. Demand becomes perfectly inelastic
Correct Answer: B
