WGU - D089 Principles of Economics WGU - D089 Principles of Economics Page 1 of 33
WGU - D089 Principles of Economics
Economics - ANSWER✔ The study of how humans make decisions in the face of
scarcity.
Factors of Production - ANSWER✔ Describes theninputs used in the production of
goods or services to make an economic profit.
Macroeconomics - ANSWER✔ A branch of economic dealing with the
performance, structure, behavior and decision making of an economy as a whole.
Microeconomics - ANSWER✔ A branch of economics that studies the behavior of
individuals, and firms in making decisions regarding the allocation of scarce
resources and the interactions among these individuals and firms.
Scarcity - ANSWER✔ The basic economic problem, the gap between limited,
scarce, resources and theoretically limitless wants
Opportunity Cost - ANSWER✔ The next best alternative that is given up when a
choice is made.
Think at the Margin - ANSWER✔ Thinking about what the next step or an
additional action means for a person.
Marginal Benefit - ANSWER✔ The incremental increase in the benefit to a
consumer caused by the consumption of one additional unit of a good or service.
pg. 1
WGU - D089 Principles of Economics WGU - D089 Principles of Economics.pdf Page 1 of 33
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1st (Principles of Economics ) - ANSWER✔ Everyone faces tradeoffs
2nd (Principles of Economics ) - ANSWER✔ The cost of something is determined
by what you give up to get it.
3rd (Principles of Economics ) - ANSWER✔ Rational people think at the margin.
4th (Principles of Economics ) - ANSWER✔ People respond to incentives.
5th (Principles of Economics ) - ANSWER✔ Trade can benefit everyone.
6th (Principles of Economics ) - ANSWER✔ Markets are a sound method of
organizing economic activity.
7th (Principles of Economics ) - ANSWER✔ Government may be able to improve
market outcomes.
8th (Principles of Economics ) - ANSWER✔ A nation's standard of living depends
on its ability to produce.
9th (Principles of Economics ) - ANSWER✔ Printing too much money causes prices
to rise.
pg. 2
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10th (Principles of Economics ) - ANSWER✔ There is short-run tradeoff between
inflation and unemployment.
Economic Systems - ANSWER✔ A system of the production, resource allocation,
and distribution of goods and services within a society or give geographic area.
Traditional Economy - ANSWER✔ A economic system that relies on customs,
history. and time-honored beliefs. Guides economic decisions such as production
and distribution.
Command Economy - ANSWER✔ An economic system in which production,
investment, prices, and incomes are determined centrally by a government.
(Centralized)
Market Economy - ANSWER✔ An economic system in which the decisions
regarding investment, production, and distribution are guided by the price signals
created by the forces of supply and demand
(Decentralized)
Mixed Economy - ANSWER✔ An economic system in which both private
enterprise and a degree of state monopoly (usually in public services, defense,
infrastructure, and basic industries) coexist.
Positive Economics - ANSWER✔ The study of economics concerned with what is
and what will happen if a course of action is taken or not taken.
pg. 3
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Normative Economics - ANSWER✔ The study of economics with what is and what
will happen if a course of action is taken or not taken.
Economic Models - ANSWER✔ A simplified version of reality that allows people to
observe, understand and make predictions about economic behavior.
Economic Indicators - ANSWER✔ A statistic about an economic activity.
Circular Flow Model - ANSWER✔ 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 - ANSWER✔ The accumulated skills and education of workers.
Research and Development - ANSWER✔ 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 - ANSWER✔ A legal form of business operation between two or more
individuals who share management and profits.
Merger - ANSWER✔ Combining two companies into a single larger company
pg. 4
WGU - D089 Principles of Economics WGU - D089 Principles of Economics.pdf Page 4 of 33
WGU - D089 Principles of Economics
Economics - ANSWER✔ The study of how humans make decisions in the face of
scarcity.
Factors of Production - ANSWER✔ Describes theninputs used in the production of
goods or services to make an economic profit.
Macroeconomics - ANSWER✔ A branch of economic dealing with the
performance, structure, behavior and decision making of an economy as a whole.
Microeconomics - ANSWER✔ A branch of economics that studies the behavior of
individuals, and firms in making decisions regarding the allocation of scarce
resources and the interactions among these individuals and firms.
Scarcity - ANSWER✔ The basic economic problem, the gap between limited,
scarce, resources and theoretically limitless wants
Opportunity Cost - ANSWER✔ The next best alternative that is given up when a
choice is made.
Think at the Margin - ANSWER✔ Thinking about what the next step or an
additional action means for a person.
Marginal Benefit - ANSWER✔ The incremental increase in the benefit to a
consumer caused by the consumption of one additional unit of a good or service.
pg. 1
WGU - D089 Principles of Economics WGU - D089 Principles of Economics.pdf Page 1 of 33
,WGU - D089 Principles of Economics WGU - D089 Principles of Economics Page 2 of 33
1st (Principles of Economics ) - ANSWER✔ Everyone faces tradeoffs
2nd (Principles of Economics ) - ANSWER✔ The cost of something is determined
by what you give up to get it.
3rd (Principles of Economics ) - ANSWER✔ Rational people think at the margin.
4th (Principles of Economics ) - ANSWER✔ People respond to incentives.
5th (Principles of Economics ) - ANSWER✔ Trade can benefit everyone.
6th (Principles of Economics ) - ANSWER✔ Markets are a sound method of
organizing economic activity.
7th (Principles of Economics ) - ANSWER✔ Government may be able to improve
market outcomes.
8th (Principles of Economics ) - ANSWER✔ A nation's standard of living depends
on its ability to produce.
9th (Principles of Economics ) - ANSWER✔ Printing too much money causes prices
to rise.
pg. 2
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,WGU - D089 Principles of Economics WGU - D089 Principles of Economics Page 3 of 33
10th (Principles of Economics ) - ANSWER✔ There is short-run tradeoff between
inflation and unemployment.
Economic Systems - ANSWER✔ A system of the production, resource allocation,
and distribution of goods and services within a society or give geographic area.
Traditional Economy - ANSWER✔ A economic system that relies on customs,
history. and time-honored beliefs. Guides economic decisions such as production
and distribution.
Command Economy - ANSWER✔ An economic system in which production,
investment, prices, and incomes are determined centrally by a government.
(Centralized)
Market Economy - ANSWER✔ An economic system in which the decisions
regarding investment, production, and distribution are guided by the price signals
created by the forces of supply and demand
(Decentralized)
Mixed Economy - ANSWER✔ An economic system in which both private
enterprise and a degree of state monopoly (usually in public services, defense,
infrastructure, and basic industries) coexist.
Positive Economics - ANSWER✔ The study of economics concerned with what is
and what will happen if a course of action is taken or not taken.
pg. 3
WGU - D089 Principles of Economics WGU - D089 Principles of Economics.pdf Page 3 of 33
, WGU - D089 Principles of Economics WGU - D089 Principles of Economics Page 4 of 33
Normative Economics - ANSWER✔ The study of economics with what is and what
will happen if a course of action is taken or not taken.
Economic Models - ANSWER✔ A simplified version of reality that allows people to
observe, understand and make predictions about economic behavior.
Economic Indicators - ANSWER✔ A statistic about an economic activity.
Circular Flow Model - ANSWER✔ 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 - ANSWER✔ The accumulated skills and education of workers.
Research and Development - ANSWER✔ 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 - ANSWER✔ A legal form of business operation between two or more
individuals who share management and profits.
Merger - ANSWER✔ Combining two companies into a single larger company
pg. 4
WGU - D089 Principles of Economics WGU - D089 Principles of Economics.pdf Page 4 of 33
