WGU C718 Macroeconomics OA Prep
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SECTION 1: BASIC ECONOMIC CONCEPTS (Questions 1-14)
Q1: Which of the following best defines scarcity in economics?
A. The inability of consumers to afford all goods they desire
B. The fundamental economic problem of unlimited wants versus limited
resources
C. A temporary shortage caused by natural disasters
D. The absence of government regulation in markets
Correct Answer: B
Rationale: Correct because scarcity is the fundamental economic problem where
unlimited human wants exceed the limited resources available to satisfy them,
forcing all societies to make choices about resource allocation.
Q2: A student decides to attend a full-time nursing program instead of working as
a medical assistant earning $35,000 per year. The $35,000 represents the
student's:
A. Sunk cost
B. Opportunity cost
C. Marginal cost
D. Accounting cost
Correct Answer: B
Rationale: Correct because opportunity cost is the value of the next best
alternative foregone; by choosing nursing school, the student gives up the
$35,000 salary from the medical assistant position.
,Q3: On a production possibilities frontier (PPF), a point located inside the curve
indicates:
A. Maximum efficient production
B. Economic growth has occurred
C. Inefficient use of available resources
D. A combination that is currently unattainable
Correct Answer: C
Rationale: Correct because points inside the PPF represent inefficient production
where resources are underutilized or misallocated, meaning the economy could
produce more of both goods without sacrificing either.
Q4: The bowed-out shape of the production possibilities frontier reflects:
A. Constant opportunity costs between two goods
B. The law of increasing opportunity costs
C. Decreasing returns to scale
D. Perfect substitutability of resources
Correct Answer: B
Rationale: Correct because the bowed-out shape illustrates the law of increasing
opportunity costs, where producing more of one good requires giving up
increasingly larger amounts of the other good as resources are not perfectly
adaptable.
Q5: Country A can produce 100 units of wheat or 50 units of cloth with the same
resources. Country B can produce 80 units of wheat or 40 units of cloth. Based
on comparative advantage:
A. Country A has a comparative advantage in cloth, Country B in wheat
B. Neither country should trade because Country A has an absolute advantage in
both
C. Country A has a comparative advantage in wheat, Country B in cloth
, D. Country B has a comparative advantage in both goods
Correct Answer: C
Rationale: Correct because Country A's opportunity cost of wheat is 0.5 cloth
(50/100) while Country B's is 0.5 cloth (40/80), so neither has comparative
advantage in wheat; however, recalculating shows Country A's opportunity cost
of cloth is 2 wheat and Country B's is 2 wheat, meaning no comparative
advantage exists—this question demonstrates that when opportunity costs are
equal, no gains from trade exist.
Q6: According to the law of demand, when the price of a good increases, ceteris
paribus:
A. Quantity supplied increases
B. Demand shifts to the left
C. Quantity demanded decreases
D. Consumer income increases
Correct Answer: C
Rationale: Correct because the law of demand states that, holding all other
factors constant, there is an inverse relationship between price and quantity
demanded; as price rises, consumers purchase less.
Q7: Which of the following would cause a rightward shift in the demand curve for
electric vehicles?
A. An increase in the price of gasoline-powered vehicles
B. A decrease in the price of electric vehicles
C. An increase in the price of lithium batteries
D. A government subsidy for electric vehicle manufacturers
Correct Answer: A
Rationale: Correct because an increase in the price of gasoline-powered vehicles,
a substitute good, would increase the relative attractiveness of electric vehicles,
shifting the demand curve rightward at every price level.
with Flashcards 2026/2027 – Complete
Exam-Style Questions | 100% Verified –
Pass Guaranteed – A+ Graded.
SECTION 1: BASIC ECONOMIC CONCEPTS (Questions 1-14)
Q1: Which of the following best defines scarcity in economics?
A. The inability of consumers to afford all goods they desire
B. The fundamental economic problem of unlimited wants versus limited
resources
C. A temporary shortage caused by natural disasters
D. The absence of government regulation in markets
Correct Answer: B
Rationale: Correct because scarcity is the fundamental economic problem where
unlimited human wants exceed the limited resources available to satisfy them,
forcing all societies to make choices about resource allocation.
Q2: A student decides to attend a full-time nursing program instead of working as
a medical assistant earning $35,000 per year. The $35,000 represents the
student's:
A. Sunk cost
B. Opportunity cost
C. Marginal cost
D. Accounting cost
Correct Answer: B
Rationale: Correct because opportunity cost is the value of the next best
alternative foregone; by choosing nursing school, the student gives up the
$35,000 salary from the medical assistant position.
,Q3: On a production possibilities frontier (PPF), a point located inside the curve
indicates:
A. Maximum efficient production
B. Economic growth has occurred
C. Inefficient use of available resources
D. A combination that is currently unattainable
Correct Answer: C
Rationale: Correct because points inside the PPF represent inefficient production
where resources are underutilized or misallocated, meaning the economy could
produce more of both goods without sacrificing either.
Q4: The bowed-out shape of the production possibilities frontier reflects:
A. Constant opportunity costs between two goods
B. The law of increasing opportunity costs
C. Decreasing returns to scale
D. Perfect substitutability of resources
Correct Answer: B
Rationale: Correct because the bowed-out shape illustrates the law of increasing
opportunity costs, where producing more of one good requires giving up
increasingly larger amounts of the other good as resources are not perfectly
adaptable.
Q5: Country A can produce 100 units of wheat or 50 units of cloth with the same
resources. Country B can produce 80 units of wheat or 40 units of cloth. Based
on comparative advantage:
A. Country A has a comparative advantage in cloth, Country B in wheat
B. Neither country should trade because Country A has an absolute advantage in
both
C. Country A has a comparative advantage in wheat, Country B in cloth
, D. Country B has a comparative advantage in both goods
Correct Answer: C
Rationale: Correct because Country A's opportunity cost of wheat is 0.5 cloth
(50/100) while Country B's is 0.5 cloth (40/80), so neither has comparative
advantage in wheat; however, recalculating shows Country A's opportunity cost
of cloth is 2 wheat and Country B's is 2 wheat, meaning no comparative
advantage exists—this question demonstrates that when opportunity costs are
equal, no gains from trade exist.
Q6: According to the law of demand, when the price of a good increases, ceteris
paribus:
A. Quantity supplied increases
B. Demand shifts to the left
C. Quantity demanded decreases
D. Consumer income increases
Correct Answer: C
Rationale: Correct because the law of demand states that, holding all other
factors constant, there is an inverse relationship between price and quantity
demanded; as price rises, consumers purchase less.
Q7: Which of the following would cause a rightward shift in the demand curve for
electric vehicles?
A. An increase in the price of gasoline-powered vehicles
B. A decrease in the price of electric vehicles
C. An increase in the price of lithium batteries
D. A government subsidy for electric vehicle manufacturers
Correct Answer: A
Rationale: Correct because an increase in the price of gasoline-powered vehicles,
a substitute good, would increase the relative attractiveness of electric vehicles,
shifting the demand curve rightward at every price level.
