1
D089 Principles of Economics Comprehensive Review Guide for
OA and Pre-assessment Prep – Questions Compiled from
Modules 1-10 | 2025 WGU D089 OA Practice Test
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example of a
“What” question.
a. What to Produce
b. How to produce it
c. Who to produce it for
2. What do economists mean when they say that people “think at the margin”?
a. They weight the cost and benefits of all options when making decisions
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
a. Standard of living is determined by a nations ability to produce goods and services
4. Using the 10 Principles of Economics, explain why trade is beneficial?
5. How does printing money impact prices?
a. Printing too much money causes pric
6. What are the differences between the Traditional and the Market economy?
a. Traditional economy – Decisions are based on traditions, beliefs and customs
b. Maret - Businesses make decisions in response to consumer demand
7. Identify two disadvantages of a Command economy?
a. Discourages innovation
b.
8. Explain one of the advantages of the Mixed economy?
a. Innovation is rewarded
9. How are macroeconomics and microeconomics different?
a. Microeconomics – focuses on the behavior of individuals and firms in the economy
b. Macroeconomics – Focuses on the behavior and performance of the overall economy
10. Give an example of a normative statement.
a. A opinion
11. Identify the payment that goes to each of the four factors of production.
a. Land – Receives rent
b. Labor - wages
c. Capital – Interest
d. Entrepreneurship – Normal profit
pg. 1
,2
12. What does the circular flow diagram depict?
Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
a. Limited resources vs. Unlimited wants
2. What does an individual’s budget constraint identify?
a. consumption
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
a. To produce more automobiles we must produce less airplanes
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
a. Point C is inefficient we are not using all our resources so to go point b there would be
not impact in production of the two goods
6. Identify the points on the above graph that are efficient. Why are these efficient?
a. Points A and B because we are using all our resources
7. What does the PPF look like when resources are homogeneous?
pg. 2
, 3
a. The demand curve is straight.
8. How does an increase in labor productivity change the PPF?
a. The demand curve would shift to the right
9. Define the term Opportunity Cost.
10. What causes increasing opportunity costs?
11. Using the information below, what is the opportunity cost of a pound of beef when production
is increased from 100 lbs/month to 200 lbs/month?
Beef (lbs/month) Wheat (bushels/month)
0 2,000
100 1,600
200 900
300 0
Module 3 – Supply, Demand and Elasticity
1. Explain the “Law of Demand” using a demand curve to illustrate the concept.
a. As price increases demand decreases and vic versa
2. Describe and illustrate a case where there is an increase in demand. Be sure to identify the
market being analyzed and the event leading to the increase in demand.
3. Does a change in the price of a good cause a change in demand or a change in quantity
demand? Explain.
a. Quantity demand because the demand curve already factors in changes in price
4. Explain the “Law of Supply” using a supply curve to illustrate the concept.
a. As price increases supply will also increase
5. Describe and illustrate a case where there is a decrease in supply. Be sure to identify the market
being analyzed and the event leading to the decrease in supply.
6. Does a change in the price of a good cause a change in supply or a change in quantity supplied?
Explain.
a. Quanity supplied as it is still on the supply curve
pg. 3
D089 Principles of Economics Comprehensive Review Guide for
OA and Pre-assessment Prep – Questions Compiled from
Modules 1-10 | 2025 WGU D089 OA Practice Test
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer? Give an example of a
“What” question.
a. What to Produce
b. How to produce it
c. Who to produce it for
2. What do economists mean when they say that people “think at the margin”?
a. They weight the cost and benefits of all options when making decisions
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
a. Standard of living is determined by a nations ability to produce goods and services
4. Using the 10 Principles of Economics, explain why trade is beneficial?
5. How does printing money impact prices?
a. Printing too much money causes pric
6. What are the differences between the Traditional and the Market economy?
a. Traditional economy – Decisions are based on traditions, beliefs and customs
b. Maret - Businesses make decisions in response to consumer demand
7. Identify two disadvantages of a Command economy?
a. Discourages innovation
b.
8. Explain one of the advantages of the Mixed economy?
a. Innovation is rewarded
9. How are macroeconomics and microeconomics different?
a. Microeconomics – focuses on the behavior of individuals and firms in the economy
b. Macroeconomics – Focuses on the behavior and performance of the overall economy
10. Give an example of a normative statement.
a. A opinion
11. Identify the payment that goes to each of the four factors of production.
a. Land – Receives rent
b. Labor - wages
c. Capital – Interest
d. Entrepreneurship – Normal profit
pg. 1
,2
12. What does the circular flow diagram depict?
Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
a. Limited resources vs. Unlimited wants
2. What does an individual’s budget constraint identify?
a. consumption
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
a. To produce more automobiles we must produce less airplanes
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
a. Point C is inefficient we are not using all our resources so to go point b there would be
not impact in production of the two goods
6. Identify the points on the above graph that are efficient. Why are these efficient?
a. Points A and B because we are using all our resources
7. What does the PPF look like when resources are homogeneous?
pg. 2
, 3
a. The demand curve is straight.
8. How does an increase in labor productivity change the PPF?
a. The demand curve would shift to the right
9. Define the term Opportunity Cost.
10. What causes increasing opportunity costs?
11. Using the information below, what is the opportunity cost of a pound of beef when production
is increased from 100 lbs/month to 200 lbs/month?
Beef (lbs/month) Wheat (bushels/month)
0 2,000
100 1,600
200 900
300 0
Module 3 – Supply, Demand and Elasticity
1. Explain the “Law of Demand” using a demand curve to illustrate the concept.
a. As price increases demand decreases and vic versa
2. Describe and illustrate a case where there is an increase in demand. Be sure to identify the
market being analyzed and the event leading to the increase in demand.
3. Does a change in the price of a good cause a change in demand or a change in quantity
demand? Explain.
a. Quantity demand because the demand curve already factors in changes in price
4. Explain the “Law of Supply” using a supply curve to illustrate the concept.
a. As price increases supply will also increase
5. Describe and illustrate a case where there is a decrease in supply. Be sure to identify the market
being analyzed and the event leading to the decrease in supply.
6. Does a change in the price of a good cause a change in supply or a change in quantity supplied?
Explain.
a. Quanity supplied as it is still on the supply curve
pg. 3
