WGU D089 PRINCIPLES OF ECONOMICS EXAM LATES 2
VERSIONS ACTUAL EXAM ALL 350 QUESTIONS AND
DETAILED VERIFIED SOLUTIONS
WGU D089 PRINCIPLES OF ECONOMICS EXAM A
QUESTION: How are Positive and Normative economics different from each other? - ANSWER-
Positive economics clearly states and economic issue, and normative economics provides the
value-based solution for the issue.
QUESTION: What are factors of production? - ANSWER-The resources the economy has
available to produce goods and services
QUESTION: How can Labor's contribution to an economy's output of goods and services be
increased? - ANSWER-By increasing either the quantity of labor of human capital.
QUESTION: What are two keys to the use of an economy's factors of production? - ANSWER-
Technology and, in the case of a market economic system, the efforts of entrepreneurs
QUESTION: For every factor of production (or input) what is there an associated factor of? -
ANSWER-Payment
QUESTION: What are factor payments? - ANSWER-What the firm pays for the use of the factors
of production
QUESTION: When human want exceeds the available resources what is the result? - ANSWER-
Scarcity
QUESTION: If the inputs of production are underutilized, is a decrease in production of the
other good required when increasing production to the point that the output combinations sit
on the production possibilities frontier? - ANSWER-No
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QUESTION: How is opportunity cost calculated? - ANSWER-By dividing the amount of a good
you have given up by the amount of the good you have gained.
QUESTION: How does opportunity cost appear along a linear production possibilities frontier? -
ANSWER-As a constant
QUESTION: What is happening to opportunity cost along a bowed out production possibilities
frontier? - ANSWER-An increase in the quantity demanded
QUESTION: What is the inverse relationship between price and quantity known as? - ANSWER-
The law of demand
QUESTION: What does a fall in the price of a good almost always cause? - ANSWER-An increase
in the quantity demanded
QUESTION: What are positive and normative economic thought? - ANSWER-Two specific
aspects of economic reasoning
QUESTION: What does the law of demand assume? - ANSWER-That all variables that affect
demand, other than price, remain constant
QUESTION: What is a demand curve? - ANSWER-a graphical representation depicting the
relationship between a good or service's price and the quantities consumers are willing to buy
at those prices.
QUESTION: What is a demand schedule? - ANSWER-A table view of the price-quantity pairings
that compose the demand curve
QUESTION: What will result in movement along a demand curve (up or down)? - ANSWER-A
change in price - a change in quantity demanded
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QUESTION: What will result in a shift in a demand curve (left or right)? - ANSWER-A change in a
non-price - a change in demand
QUESTION: What causes changes in demand (shifts in the demand curve)? - ANSWER-- Changes
in consumer income, tastes, and preferences
- The size of the population
- prices of other goods such as complements and substitutes
- expectations about the future.
QUESTION: What fundamental similarity do nearly all demand curves share? - ANSWER-They
slope down from left to right
QUESTION: What is the positive relationship between price and quantity known as? - ANSWER-
The law of supply
QUESTION: What does the law of supply assume? - ANSWER-That all variables affecting supply,
other than price, remain constant
QUESTION: What does a rise in the price of a good or service increase? - ANSWER-The quantity
supplied of that good or service
QUESTION: What does a supply curve depict? - ANSWER-The relationship between the price of
a good or service and the quantities companies are willing to sell at those prices
QUESTION: What is a supply schedule? - ANSWER-A table view of the price-quantity pairing that
compose the supply curve.
QUESTION: What will suppliers do to adjust for non-price changes related to the determinants
of supply? - ANSWER-Shift production
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QUESTION: What will suppliers do to adjust for price-related changes on the supply curve? -
ANSWER-Move production levels
QUESTION: what are changes in supply (shifts in the supply curve) caused by? - ANSWER-Prices
of inputs, technology,expectations, number of sellers, and government policies and regulations
QUESTION: What fundamental similarity do nearly all supply curves share? - ANSWER-They
slope up from left to right
QUESTION: When does the equilibrium price and equilibrium quantity occur? - ANSWER-Where
the supply and demand curves cross.
QUESTION: When does equilibrium occur? - ANSWER-When the quantity demanded is equal to
the quantity supplied
QUESTION: Why would the price be below the equilibrium level? - ANSWER-The quantity
demanded will exceed the quantity supplied. -- Excess demand or a shortage will exist.
QUESTION: What is occurring if the price is above the equilibrium level? - ANSWER-The quantity
supplied will exceed the quantity demanded. -- Excess supply or a surplus will exist
QUESTION: When does the equilibrium in the market change? - ANSWER-When an event shifts
either the supply or demand curve
QUESTION: What does price elasticity measure? - ANSWER-The responsiveness of the quantity
demanded or supplied of a good to a change in its price.
QUESTION: How is price elasticity of demand calculated? - ANSWER-% change in quantity
demand / % change in price
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