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 defines economics?
A. The study of how governments collect taxes
B. The study of how scarce resources are allocated among competing uses
C. The study of how businesses maximize revenue regardless of costs
D. The study of financial markets exclusively
Answer: B
Explanation: Economics examines how individuals, firms, and societies make choices when
resources are scarce and wants are unlimited.
2. What is opportunity cost?
A. The monetary price printed on a product
B. The value of the next-best alternative given up when making a choice
C. The total amount of money spent on a decision
D. The accounting profit earned from a decision
Answer: B
Explanation: Opportunity cost measures what is sacrificed by choosing one alternative over the
next-best available alternative.
3. A student spends Saturday studying instead of working a $20-per-hour job for 5 hours.
Ignoring other costs, what is the opportunity cost of studying?
A. $20
B. $100
C. $200
D. $500
Answer: B
,Explanation: Five hours × $20/hour = $100 of foregone wages.
4. Which economic principle explains why people compare additional benefits with additional
costs?
A. Marginal analysis
B. Comparative advantage
C. Price discrimination
D. Monetary neutrality
Answer: A
Explanation: Marginal analysis evaluates the additional benefit and additional cost associated
with one more unit of an activity.
5. A production possibilities curve illustrates:
A. The relationship between inflation and unemployment
B. Maximum combinations of goods an economy can produce with available resources and
technology
C. The relationship between price and quantity demanded for one product
D. The government's annual tax revenue
Answer: B
Explanation: A production possibilities curve represents feasible production combinations given
existing resources and technology.
6. An economy moves from a point inside its production possibilities curve to a point on the
curve. What does this generally indicate?
A. Greater productive efficiency
B. Reduced resource utilization
C. An impossible production level
D. A permanent decline in technology
Answer: A
Explanation: A point inside the PPF represents underutilized resources or inefficiency. Moving
to the curve indicates more efficient use of available resources.
,7. If the price of a product rises and consumers purchase less of that same product, this
illustrates:
A. The law of demand
B. The law of supply
C. Comparative advantage
D. Economies of scale
Answer: A
Explanation: Holding other factors constant, quantity demanded generally decreases as price
increases.
8. Which event would most likely 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 price of the good itself
D. An increase in production costs
Answer: B
Explanation: For a normal good, higher consumer income increases demand, shifting the
demand curve to the right.
9. What is the difference between a change in quantity demanded and a change in demand?
A. Quantity demanded changes because of the good's own price; demand changes because of
other determinants
B. They are identical concepts
C. Demand changes only when income changes
D. Quantity demanded changes only when supply changes
Answer: A
Explanation: A change in the product's own price causes movement along the demand curve.
Factors such as income, preferences, expectations, and prices of related goods shift the entire
demand curve.
, 10. Which event would most likely shift the supply curve to the left?
A. A decrease in input costs
B. Improved production technology
C. An increase in production costs
D. An increase in the number of sellers
Answer: C
Explanation: Higher input costs make production less profitable at existing prices, reducing
supply.
11. Market equilibrium occurs when:
A. Quantity supplied equals quantity demanded
B. The government fixes the price
C. Producers earn zero revenue
D. Demand is greater than supply
Answer: A
Explanation: The equilibrium price and quantity occur where the quantity consumers want to
buy equals the quantity producers want to sell.
12. A binding price ceiling set below equilibrium will most likely create:
A. A surplus
B. A shortage
C. Higher equilibrium quantity
D. No market effect
Answer: B
Explanation: A price ceiling below equilibrium prevents the price from rising to equilibrium,
causing quantity demanded to exceed quantity supplied.
13. A binding price floor set above equilibrium will most likely create:
A. A shortage
B. A surplus
ECONOMICS EXAM QUESTIONS AND CORRECT
ANSWERS | LATEST VERSION | ALREADY GRADED A+
| JUST RELEASED
Course
WGU D089
1. Which statement best defines economics?
A. The study of how governments collect taxes
B. The study of how scarce resources are allocated among competing uses
C. The study of how businesses maximize revenue regardless of costs
D. The study of financial markets exclusively
Answer: B
Explanation: Economics examines how individuals, firms, and societies make choices when
resources are scarce and wants are unlimited.
2. What is opportunity cost?
A. The monetary price printed on a product
B. The value of the next-best alternative given up when making a choice
C. The total amount of money spent on a decision
D. The accounting profit earned from a decision
Answer: B
Explanation: Opportunity cost measures what is sacrificed by choosing one alternative over the
next-best available alternative.
3. A student spends Saturday studying instead of working a $20-per-hour job for 5 hours.
Ignoring other costs, what is the opportunity cost of studying?
A. $20
B. $100
C. $200
D. $500
Answer: B
,Explanation: Five hours × $20/hour = $100 of foregone wages.
4. Which economic principle explains why people compare additional benefits with additional
costs?
A. Marginal analysis
B. Comparative advantage
C. Price discrimination
D. Monetary neutrality
Answer: A
Explanation: Marginal analysis evaluates the additional benefit and additional cost associated
with one more unit of an activity.
5. A production possibilities curve illustrates:
A. The relationship between inflation and unemployment
B. Maximum combinations of goods an economy can produce with available resources and
technology
C. The relationship between price and quantity demanded for one product
D. The government's annual tax revenue
Answer: B
Explanation: A production possibilities curve represents feasible production combinations given
existing resources and technology.
6. An economy moves from a point inside its production possibilities curve to a point on the
curve. What does this generally indicate?
A. Greater productive efficiency
B. Reduced resource utilization
C. An impossible production level
D. A permanent decline in technology
Answer: A
Explanation: A point inside the PPF represents underutilized resources or inefficiency. Moving
to the curve indicates more efficient use of available resources.
,7. If the price of a product rises and consumers purchase less of that same product, this
illustrates:
A. The law of demand
B. The law of supply
C. Comparative advantage
D. Economies of scale
Answer: A
Explanation: Holding other factors constant, quantity demanded generally decreases as price
increases.
8. Which event would most likely 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 price of the good itself
D. An increase in production costs
Answer: B
Explanation: For a normal good, higher consumer income increases demand, shifting the
demand curve to the right.
9. What is the difference between a change in quantity demanded and a change in demand?
A. Quantity demanded changes because of the good's own price; demand changes because of
other determinants
B. They are identical concepts
C. Demand changes only when income changes
D. Quantity demanded changes only when supply changes
Answer: A
Explanation: A change in the product's own price causes movement along the demand curve.
Factors such as income, preferences, expectations, and prices of related goods shift the entire
demand curve.
, 10. Which event would most likely shift the supply curve to the left?
A. A decrease in input costs
B. Improved production technology
C. An increase in production costs
D. An increase in the number of sellers
Answer: C
Explanation: Higher input costs make production less profitable at existing prices, reducing
supply.
11. Market equilibrium occurs when:
A. Quantity supplied equals quantity demanded
B. The government fixes the price
C. Producers earn zero revenue
D. Demand is greater than supply
Answer: A
Explanation: The equilibrium price and quantity occur where the quantity consumers want to
buy equals the quantity producers want to sell.
12. A binding price ceiling set below equilibrium will most likely create:
A. A surplus
B. A shortage
C. Higher equilibrium quantity
D. No market effect
Answer: B
Explanation: A price ceiling below equilibrium prevents the price from rising to equilibrium,
causing quantity demanded to exceed quantity supplied.
13. A binding price floor set above equilibrium will most likely create:
A. A shortage
B. A surplus
