Economics D089 Exam Questions with Correct Answers 2025/2026

Economics D089 Exam Questions with Correct Answers 2025/2026 A property owner has 500 acres of flat land and has been approached by two different businesses. One business wants to drill for oil, and the other wants to raise cattle. Which Fundamental Question of Economics is the property owner trying to answer? - Correct Answer What to produce—Using the economy's scarce resources to produce one thing requires giving up another. Producing better education, for example, may require decreasing other services, such as healthcare. A person graduates from college and gets a full-time job. What happens to the demand for this person's goods and services? No change in demand for either goods or services. Demand increases. It depends whether demand is elastic or inelastic. Demand decreases. - Correct Answer Demand increases. Correct! Demand increases with higher income. A well-established company has been producing goods and wants to create a new line of production. The company needs to decide whether it should use a current factory or find a new location. Which Fundamental Question of Economics is the property owner trying to answer? - Correct Answer How to produce it—There are all sorts of choices to be made in determining how goods and services should be produced. Should a firm employ a few skilled workers or a lot of unskilled workers? Should it produce in its own country or should it use foreign plants? Should manufacturing firms use new raw materials or recycled raw materials to make their products? To address environmental concerns, Congress is considering a bill that would increase the price of electricity generated by coal. Increasing the price of electricity creates a problem for low-income households. Which Fundamental Question of Economics is the property owner trying to answer? - Correct Answer For whom to produce it—If a good or service is produced, a decision must be made about who will get it. A decision to have one person or group receive a good or service usually means the good or service will not be available to someone else. For example, representatives of the poorest nations on earth often complain that the energy consumption per person in the United States is 17 times greater than the energy consumption per person in the world's 62 poorest countries. Opportunity cost - Correct Answer The next best alternative that is given up when a choice is made Everyone faces tradeoffs - Correct Answer People must decide what they are willing to give up to get what they need or want.