WGU D089 PRACTICE QUESTIONS |
PRINCIPLES OF ECONOMICS | QUESTIONS
AND ANSWERS | EXAM PREP | GRADED A+
| GUARANTEED SUCCESS
Updated Questions and Answers | 100% Verified Exam Prep
, 1. What are the three fundamental questions every economy Give an example of a "What" question. 1. What to produce? Ex: One business wants to drill
must answer? for oil, the other want to raise cattle. 2. How to produce it? Ex: Company needs to decide
to use a current factory or find a new location. 3. From who to produce?
10 Principles of economics? 1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces a short-run trade-off between inflation and unemployment
11. Identify the payment that goes to each of the four factors of 1. Natural resources: rent for land and buildings. 2. Labor: wages 3.Capital: interest and
production? dividends 4. Entrepreneur: profit
12. What does the circular flow diagram depict? The circular flow model demonstrates how money moves through society. Money flows
from producers to workers as wages and flows back to producers as payment for
products. In short, an economy is an endless circular flow of money.
1. Why is the concept of scarcity so important in economics? Because the number of goods and services that can be produced with them can be
limited and there will never be enough resources to meet everyone's needs.
2. What does an individual's budget constraint identify? all the possible combinations that you can afford within their given income.
3. Identify two ways in which the budget constraint and the They are similar because they both assume resource and technology are fixed and they
PPF are similar and two ways in which they are different. both use two goods to simplify assumptions. They are different because the budget
constraint is used by individuals and PPF is used by firms.
7. What does the PPF look like when resources are It is a straight line.
homogeneous?
8. How does an increase in labor productivity change the It moves to the right.
PPF?
9. Define the term Opportunity Cost. It is what is given up when making a decision.
PRINCIPLES OF ECONOMICS | QUESTIONS
AND ANSWERS | EXAM PREP | GRADED A+
| GUARANTEED SUCCESS
Updated Questions and Answers | 100% Verified Exam Prep
, 1. What are the three fundamental questions every economy Give an example of a "What" question. 1. What to produce? Ex: One business wants to drill
must answer? for oil, the other want to raise cattle. 2. How to produce it? Ex: Company needs to decide
to use a current factory or find a new location. 3. From who to produce?
10 Principles of economics? 1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces a short-run trade-off between inflation and unemployment
11. Identify the payment that goes to each of the four factors of 1. Natural resources: rent for land and buildings. 2. Labor: wages 3.Capital: interest and
production? dividends 4. Entrepreneur: profit
12. What does the circular flow diagram depict? The circular flow model demonstrates how money moves through society. Money flows
from producers to workers as wages and flows back to producers as payment for
products. In short, an economy is an endless circular flow of money.
1. Why is the concept of scarcity so important in economics? Because the number of goods and services that can be produced with them can be
limited and there will never be enough resources to meet everyone's needs.
2. What does an individual's budget constraint identify? all the possible combinations that you can afford within their given income.
3. Identify two ways in which the budget constraint and the They are similar because they both assume resource and technology are fixed and they
PPF are similar and two ways in which they are different. both use two goods to simplify assumptions. They are different because the budget
constraint is used by individuals and PPF is used by firms.
7. What does the PPF look like when resources are It is a straight line.
homogeneous?
8. How does an increase in labor productivity change the It moves to the right.
PPF?
9. Define the term Opportunity Cost. It is what is given up when making a decision.
