D089 / D 089 Final Exam (Latest Update
) Principles of Economics |
Questions and Answers | Grade A | 100%
Correct - WGU
Question: What is the definition of economics?
Answer: The study of how society manages scarce resources
Rationale: Economics examines how individuals, businesses, and governments allocate
limited resources to meet unlimited wants.
Question: What is opportunity cost?
Answer: The value of the next best alternative foregone
Rationale: Opportunity cost represents what is sacrificed when choosing one option over
the next best alternative.
Question: What does the term "scarcity" refer to in economics?
Answer: Limited resources relative to unlimited wants
Rationale: Scarcity forces societies to make choices about resource allocation due to
finite resources and infinite desires.
Question: What is a market economy?
Answer: A system where businesses make decisions based on consumer demand
Rationale: In a market economy, prices and production are driven by supply and
demand, with minimal government intervention.
Question: What is the circular flow model?
Answer: An economic model showing the flow of money and goods between households
and businesses
Rationale: The model illustrates interactions between households (providing labor,
receiving income) and businesses (producing goods, paying wages).
, Question: What is a capital good?
Answer: Goods used in producing other goods, not bought by consumers
Rationale: Capital goods, like machinery, are used in production processes, unlike
consumer goods purchased for personal use.
Question: What is a cartel?
Answer: A group of firms colluding to produce monopoly output and sell at monopoly
prices
Rationale: Cartels reduce competition by coordinating to limit output and raise prices,
acting like a monopoly.
Question: What is comparative advantage?
Answer: The ability to produce a good at a lower opportunity cost than another
Rationale: Comparative advantage drives trade by allowing specialization in goods with
lower relative costs.
Question: What is the role of a central bank?
Answer: Regulates money supply, issues currency, and controls interest rates
Rationale: Central banks, like the Federal Reserve, manage monetary policy to stabilize
the economy.
Question: What is commodity money?
Answer: An item used as money that has value from its use as something else
Rationale: Commodity money, like gold, has intrinsic value beyond its use as currency.
Question: What is a command economy?
Answer: An economy where the government centrally determines production and prices
Rationale: In a command economy, the government controls economic decisions, unlike a
market economy.
Question: What does it mean to "think at the margin"?
Answer: Making decisions based on small, incremental changes
Rationale: Marginal thinking involves weighing additional benefits against additional costs.
) Principles of Economics |
Questions and Answers | Grade A | 100%
Correct - WGU
Question: What is the definition of economics?
Answer: The study of how society manages scarce resources
Rationale: Economics examines how individuals, businesses, and governments allocate
limited resources to meet unlimited wants.
Question: What is opportunity cost?
Answer: The value of the next best alternative foregone
Rationale: Opportunity cost represents what is sacrificed when choosing one option over
the next best alternative.
Question: What does the term "scarcity" refer to in economics?
Answer: Limited resources relative to unlimited wants
Rationale: Scarcity forces societies to make choices about resource allocation due to
finite resources and infinite desires.
Question: What is a market economy?
Answer: A system where businesses make decisions based on consumer demand
Rationale: In a market economy, prices and production are driven by supply and
demand, with minimal government intervention.
Question: What is the circular flow model?
Answer: An economic model showing the flow of money and goods between households
and businesses
Rationale: The model illustrates interactions between households (providing labor,
receiving income) and businesses (producing goods, paying wages).
, Question: What is a capital good?
Answer: Goods used in producing other goods, not bought by consumers
Rationale: Capital goods, like machinery, are used in production processes, unlike
consumer goods purchased for personal use.
Question: What is a cartel?
Answer: A group of firms colluding to produce monopoly output and sell at monopoly
prices
Rationale: Cartels reduce competition by coordinating to limit output and raise prices,
acting like a monopoly.
Question: What is comparative advantage?
Answer: The ability to produce a good at a lower opportunity cost than another
Rationale: Comparative advantage drives trade by allowing specialization in goods with
lower relative costs.
Question: What is the role of a central bank?
Answer: Regulates money supply, issues currency, and controls interest rates
Rationale: Central banks, like the Federal Reserve, manage monetary policy to stabilize
the economy.
Question: What is commodity money?
Answer: An item used as money that has value from its use as something else
Rationale: Commodity money, like gold, has intrinsic value beyond its use as currency.
Question: What is a command economy?
Answer: An economy where the government centrally determines production and prices
Rationale: In a command economy, the government controls economic decisions, unlike a
market economy.
Question: What does it mean to "think at the margin"?
Answer: Making decisions based on small, incremental changes
Rationale: Marginal thinking involves weighing additional benefits against additional costs.
