1|Page
WGU - D089 PRINCIPLES OF
ECONOMICS 90+ (FULLY UPDATED
2026/2027) EXAM QUESTIONS +
VERIFIED & RATIONALIZED ANSWERS
A+ GRADED [QUESTION 1-100] AND
ANSWERS UPDATED 2026/2027 | 100%
VERIFIED | DETAILED RATIONALES –
PASS GUARANTEED A+ GRADED |
INSTANT DOWNLOAD
INTRODUCTION
WGU D089 Principles of Economics introduces students to the economic concepts needed to
analyze how individuals, businesses, governments, and economies make decisions when
resources are scarce. WGU identifies three major competencies for the course: The Economic
Way of Thinking, Microeconomics, and Macroeconomics. Microeconomics focuses heavily
on supply and demand, elasticity, efficiency, market failure, production costs, and market
structures, while macroeconomics examines economic performance, aggregate supply and
demand, money, monetary and fiscal policy, and international trade. Western Governors
University
This practice bank is designed for students preparing for D089 who want to move beyond
memorization and develop the ability to apply economic principles to unfamiliar scenarios.
Questions emphasize calculations, graphs described in words, business decisions, government
policy, market behavior, and cause-and-effect relationships.
The questions are original practice questions, not purported copies of WGU assessment items.
Each question contains four answer choices, one best answer, and a detailed rationale explaining
the reasoning behind the correct choice and why the alternatives are less appropriate.
CONTENT AREA OVERVIEW
,2|Page
Suggested
Content Area Questions Key Topics
Weight
Scarcity, opportunity cost, incentives, marginal
1. The Economic
1–25 analysis, PPF, comparative advantage, economic ~17%
Way of Thinking
systems
Supply & demand, equilibrium, elasticity,
consumer/producer surplus, taxes, price
2. Microeconomics 26–90 ~43%
controls, externalities, costs, production, market
structures
GDP, unemployment, inflation, business cycles,
AD/AS, fiscal policy, money, monetary policy,
3. Macroeconomics 91–150 ~40%
Phillips curve, exchange rates, international
trade
The percentages above are a study-planning framework, not an official WGU assessment
blueprint.
QUESTIONS 1–150
CONTENT AREA 1 — THE ECONOMIC WAY OF
THINKING
Q1:
A construction company has one excavator available for a project. Management can use it to
complete a road contract generating $18,000 of contribution margin or a drainage contract
generating $14,000. No other equipment is available. If the company chooses the road contract,
what is the opportunity cost?
A) $18,000
B) $14,000
C) $4,000
D) $32,000
Rationale: The correct answer is B because opportunity cost is the value of the next-best
alternative forgone. By choosing the road project, the company gives up the $14,000
contribution margin from the drainage project. A is incorrect because it represents the benefit of
the chosen alternative rather than its opportunity cost. C is the difference between the
alternatives, not the opportunity cost. D incorrectly adds the two alternatives.
Q2:
,3|Page
A student can spend Saturday studying for an economics examination or working a shift that
pays $120. The student values the additional preparation at $150 but would otherwise earn $120.
Which principle best explains the decision?
A) Absolute advantage
B) Marginal analysis
C) Price ceiling
D) Comparative advantage
Rationale: B is correct because marginal analysis compares the additional benefit of an activity
with its additional cost. The student should compare the marginal benefit of studying with the
$120 income sacrificed. A and D concern production advantages between parties. C concerns
government-imposed maximum prices and is unrelated.
Q3:
A government offers businesses a tax credit for every additional employee hired. Firms respond
by increasing hiring. This is best explained by which economic principle?
A) Sunk costs determine hiring decisions
B) Scarcity disappears when incentives are offered
C) People respond to incentives
D) Inflation automatically increases employment
Rationale: C is correct because the tax credit changes the payoff from hiring and therefore
changes firms' behavior. A is incorrect because sunk costs should not determine marginal
decisions. B is incorrect because incentives do not eliminate scarcity. D is incorrect because the
scenario involves a targeted hiring incentive, not inflation.
Q4:
An economy can produce either 100 units of agricultural equipment or 500 units of consumer
goods using all available resources. A movement along its production possibilities frontier
toward more equipment would necessarily require:
A) An outward shift of the PPF
B) Giving up some consumer-goods production
C) Eliminating scarcity
D) Increasing unemployment automatically
Rationale: B is correct because resources are limited, so producing more of one good requires
sacrificing some production of another when operating on the frontier. A would represent
economic growth or improved productive capacity rather than movement along the existing
frontier. C is impossible because scarcity remains. D is not necessarily true because the
economy can reallocate fully employed resources.
, 4|Page
Q5:
Country A can produce either 40 computers or 80 tons of wheat. Country B can produce either
20 computers or 60 tons of wheat. Which country has the comparative advantage in computers?
A) Country B because it produces fewer computers
B) Country A because its opportunity cost of computers is lower
C) Country A because it has no opportunity cost
D) Country B because wheat production is larger relative to computers
Rationale: B is correct. Country A gives up 2 tons of wheat for each computer, while Country B
gives up 3 tons of wheat per computer. Therefore, A has the lower opportunity cost and
comparative advantage in computers. A is incorrect because lower output does not establish
comparative advantage. C is impossible because producing computers always involves an
opportunity cost. D does not correctly calculate opportunity cost.
Q6:
A manager is deciding whether to keep a poorly performing product line. The product has
already generated $500,000 in development costs that cannot be recovered. Which approach is
economically appropriate?
A) Continue producing because $500,000 has already been spent
B) Stop production solely because the past expenditure was large
C) Ignore the sunk cost and compare future marginal benefits and costs
D) Treat the $500,000 as an opportunity cost of every future unit
Rationale: C is correct because sunk costs cannot be recovered and therefore should not
influence a rational forward-looking decision. A incorrectly allows sunk costs to influence the
decision. B makes the opposite mistake by assuming the sunk cost itself proves production should
stop. D incorrectly treats a past expenditure as a future opportunity cost.
Q7:
Two firms specialize in different products and voluntarily trade because each expects to receive
something more valuable than what it gives up. Which concept best explains this outcome?
A) Monopoly power
B) Price discrimination
C) Gains from trade
D) Diseconomies of scale
Rationale: C is correct because voluntary exchange can make both parties better off when each
specializes according to comparative advantage. A concerns market power. B involves charging
different prices to different consumers. D concerns rising average costs as production expands.
WGU - D089 PRINCIPLES OF
ECONOMICS 90+ (FULLY UPDATED
2026/2027) EXAM QUESTIONS +
VERIFIED & RATIONALIZED ANSWERS
A+ GRADED [QUESTION 1-100] AND
ANSWERS UPDATED 2026/2027 | 100%
VERIFIED | DETAILED RATIONALES –
PASS GUARANTEED A+ GRADED |
INSTANT DOWNLOAD
INTRODUCTION
WGU D089 Principles of Economics introduces students to the economic concepts needed to
analyze how individuals, businesses, governments, and economies make decisions when
resources are scarce. WGU identifies three major competencies for the course: The Economic
Way of Thinking, Microeconomics, and Macroeconomics. Microeconomics focuses heavily
on supply and demand, elasticity, efficiency, market failure, production costs, and market
structures, while macroeconomics examines economic performance, aggregate supply and
demand, money, monetary and fiscal policy, and international trade. Western Governors
University
This practice bank is designed for students preparing for D089 who want to move beyond
memorization and develop the ability to apply economic principles to unfamiliar scenarios.
Questions emphasize calculations, graphs described in words, business decisions, government
policy, market behavior, and cause-and-effect relationships.
The questions are original practice questions, not purported copies of WGU assessment items.
Each question contains four answer choices, one best answer, and a detailed rationale explaining
the reasoning behind the correct choice and why the alternatives are less appropriate.
CONTENT AREA OVERVIEW
,2|Page
Suggested
Content Area Questions Key Topics
Weight
Scarcity, opportunity cost, incentives, marginal
1. The Economic
1–25 analysis, PPF, comparative advantage, economic ~17%
Way of Thinking
systems
Supply & demand, equilibrium, elasticity,
consumer/producer surplus, taxes, price
2. Microeconomics 26–90 ~43%
controls, externalities, costs, production, market
structures
GDP, unemployment, inflation, business cycles,
AD/AS, fiscal policy, money, monetary policy,
3. Macroeconomics 91–150 ~40%
Phillips curve, exchange rates, international
trade
The percentages above are a study-planning framework, not an official WGU assessment
blueprint.
QUESTIONS 1–150
CONTENT AREA 1 — THE ECONOMIC WAY OF
THINKING
Q1:
A construction company has one excavator available for a project. Management can use it to
complete a road contract generating $18,000 of contribution margin or a drainage contract
generating $14,000. No other equipment is available. If the company chooses the road contract,
what is the opportunity cost?
A) $18,000
B) $14,000
C) $4,000
D) $32,000
Rationale: The correct answer is B because opportunity cost is the value of the next-best
alternative forgone. By choosing the road project, the company gives up the $14,000
contribution margin from the drainage project. A is incorrect because it represents the benefit of
the chosen alternative rather than its opportunity cost. C is the difference between the
alternatives, not the opportunity cost. D incorrectly adds the two alternatives.
Q2:
,3|Page
A student can spend Saturday studying for an economics examination or working a shift that
pays $120. The student values the additional preparation at $150 but would otherwise earn $120.
Which principle best explains the decision?
A) Absolute advantage
B) Marginal analysis
C) Price ceiling
D) Comparative advantage
Rationale: B is correct because marginal analysis compares the additional benefit of an activity
with its additional cost. The student should compare the marginal benefit of studying with the
$120 income sacrificed. A and D concern production advantages between parties. C concerns
government-imposed maximum prices and is unrelated.
Q3:
A government offers businesses a tax credit for every additional employee hired. Firms respond
by increasing hiring. This is best explained by which economic principle?
A) Sunk costs determine hiring decisions
B) Scarcity disappears when incentives are offered
C) People respond to incentives
D) Inflation automatically increases employment
Rationale: C is correct because the tax credit changes the payoff from hiring and therefore
changes firms' behavior. A is incorrect because sunk costs should not determine marginal
decisions. B is incorrect because incentives do not eliminate scarcity. D is incorrect because the
scenario involves a targeted hiring incentive, not inflation.
Q4:
An economy can produce either 100 units of agricultural equipment or 500 units of consumer
goods using all available resources. A movement along its production possibilities frontier
toward more equipment would necessarily require:
A) An outward shift of the PPF
B) Giving up some consumer-goods production
C) Eliminating scarcity
D) Increasing unemployment automatically
Rationale: B is correct because resources are limited, so producing more of one good requires
sacrificing some production of another when operating on the frontier. A would represent
economic growth or improved productive capacity rather than movement along the existing
frontier. C is impossible because scarcity remains. D is not necessarily true because the
economy can reallocate fully employed resources.
, 4|Page
Q5:
Country A can produce either 40 computers or 80 tons of wheat. Country B can produce either
20 computers or 60 tons of wheat. Which country has the comparative advantage in computers?
A) Country B because it produces fewer computers
B) Country A because its opportunity cost of computers is lower
C) Country A because it has no opportunity cost
D) Country B because wheat production is larger relative to computers
Rationale: B is correct. Country A gives up 2 tons of wheat for each computer, while Country B
gives up 3 tons of wheat per computer. Therefore, A has the lower opportunity cost and
comparative advantage in computers. A is incorrect because lower output does not establish
comparative advantage. C is impossible because producing computers always involves an
opportunity cost. D does not correctly calculate opportunity cost.
Q6:
A manager is deciding whether to keep a poorly performing product line. The product has
already generated $500,000 in development costs that cannot be recovered. Which approach is
economically appropriate?
A) Continue producing because $500,000 has already been spent
B) Stop production solely because the past expenditure was large
C) Ignore the sunk cost and compare future marginal benefits and costs
D) Treat the $500,000 as an opportunity cost of every future unit
Rationale: C is correct because sunk costs cannot be recovered and therefore should not
influence a rational forward-looking decision. A incorrectly allows sunk costs to influence the
decision. B makes the opposite mistake by assuming the sunk cost itself proves production should
stop. D incorrectly treats a past expenditure as a future opportunity cost.
Q7:
Two firms specialize in different products and voluntarily trade because each expects to receive
something more valuable than what it gives up. Which concept best explains this outcome?
A) Monopoly power
B) Price discrimination
C) Gains from trade
D) Diseconomies of scale
Rationale: C is correct because voluntary exchange can make both parties better off when each
specializes according to comparative advantage. A concerns market power. B involves charging
different prices to different consumers. D concerns rising average costs as production expands.
