Page 1 of 32
WGU D089 PRE ASSESSMENT (MICRO &
MACRO) PRINCIPLES OF ECONOMICS
ACTUAL EXAM PREP 2026 ALL QUESTIONS
AND CORRECT DETAILED ANSWERS
ALREADY A GRADED WITH EXPERT
FEEDBACK | NEW AND REVISED
This pre-assessment evaluates foundational mastery in microeconomics and macroeconomics for
WGU D089. It covers supply & demand, elasticity, consumer choice, production and costs,
market structures, market failures, GDP and growth, inflation, unemployment, monetary and
fiscal policy, open-economy topics, and applied problem-solving. Questions are scenario-based,
balanced across difficulty levels, and written in exam-style language to help you identify
strengths and learning gaps before the course. Use this assessment for diagnostic practice and
targeted study planning.
1. If the price of coffee rises and tea is a substitute, the demand curve
for tea will:
A. Shift left
B. Shift right
C. Move down along demand
D. Not change
Higher coffee prices lead some consumers to buy more tea —
demand increases (shift right).
2. The law of diminishing marginal utility implies that the additional
satisfaction from consuming one more unit:
A. Always increases
B. Is constant
C. Eventually decreases
D. Is irrelevant to demand
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As consumption rises, marginal utility tends to fall, explaining
downward-sloping demand.
3. Price elasticity of demand greater than 1 means demand is:
A. Inelastic
B. Unitary
C. Elastic
D. Perfectly inelastic
Quantity demanded responds proportionally more than price
changes when elasticity > 1.
4. A binding price ceiling set below equilibrium produces:
A. Surplus
B. Equilibrium price rise
C. Shortage
D. No effect
Quantity demanded exceeds quantity supplied at the capped
price.
5. A firm in perfect competition maximizes profit by producing
where:
A. Price = average cost
B. Price = marginal cost
C. Marginal cost = average cost
D. Price > marginal cost
Firm is price taker; produce until P = MC.
6. A monopolist sets output where MR = MC and charges:
A. Price = MR
B. Price = MC
C. Price > MC (on demand curve)
D. Price = zero
Monopoly markup yields price above marginal cost.
7. In the long run under perfect competition, economic profits are:
A. Positive
B. Negative
C. Zero (normal profit)
D. Indeterminate
Free entry/exit drives profits to normal levels.
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8. Comparative advantage means a country can produce a good:
A. With more resources always
B. At lower opportunity cost
C. Using fewer workers only
D. Only if it has absolute advantage
Trade gains arise from lower opportunity costs, not absolute
productivity.
9. The bowed-out shape of a production possibilities frontier
indicates:
A. Constant opportunity cost
B. No scarcity
C. Increasing opportunity costs
D. Unlimited resources
Specialized resources make transfers increasingly costly.
10. Consumer surplus equals:
A. Producer revenue
B. Government tax revenue
C. Willingness to pay minus price
D. Total quantity sold
Measures net benefit consumers receive above the price paid.
11. If TR = TC for a firm, economic profit is:
A. Positive
B. Negative
C. Zero
D. Undefined
Accounting for opportunity costs, zero economic profit is normal
profit.
12. A natural monopoly typically arises because:
A. Demand is tiny
B. One firm has declining average cost over market demand
C. Technology is identical across firms
D. Low fixed costs exist
High fixed costs and economies of scale favor a single provider.
13. Negative cross-price elasticity between two goods indicates
they are:
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A. Substitutes
B. Complements
C. Independent
D. Inferior
An increase in price of one good lowers demand for the other.
14. Diminishing marginal returns implies marginal cost will:
A. Decrease forever
B. Increase after a point
C. Stay constant
D. Be zero
When marginal product falls, producing additional units
becomes costlier.
15. In the short run, a firm should shut down if price is:
A. Above ATC
B. Below average variable cost (AVC)
C. Equal to marginal cost
D. Greater than zero always
If price doesn't cover variable costs, producing increases losses
over shutting down.
16. Moral hazard occurs when:
A. Consumers lack information
B. Agents change behavior because they are insured or
protected
C. Markets are perfectly competitive
D. Prices are flexible
Insurance can lead to riskier choices since consequences are
shifted.
17. If MPC = 0.8, the simple spending multiplier equals:
A. 1.25
B. 0.8
C. 5
D. 0.2
Multiplier = 1 / (1 − MPC) = .2 = 5.
18. Real GDP differs from nominal GDP because it:
A. Uses current prices only
WGU D089 PRE ASSESSMENT (MICRO &
MACRO) PRINCIPLES OF ECONOMICS
ACTUAL EXAM PREP 2026 ALL QUESTIONS
AND CORRECT DETAILED ANSWERS
ALREADY A GRADED WITH EXPERT
FEEDBACK | NEW AND REVISED
This pre-assessment evaluates foundational mastery in microeconomics and macroeconomics for
WGU D089. It covers supply & demand, elasticity, consumer choice, production and costs,
market structures, market failures, GDP and growth, inflation, unemployment, monetary and
fiscal policy, open-economy topics, and applied problem-solving. Questions are scenario-based,
balanced across difficulty levels, and written in exam-style language to help you identify
strengths and learning gaps before the course. Use this assessment for diagnostic practice and
targeted study planning.
1. If the price of coffee rises and tea is a substitute, the demand curve
for tea will:
A. Shift left
B. Shift right
C. Move down along demand
D. Not change
Higher coffee prices lead some consumers to buy more tea —
demand increases (shift right).
2. The law of diminishing marginal utility implies that the additional
satisfaction from consuming one more unit:
A. Always increases
B. Is constant
C. Eventually decreases
D. Is irrelevant to demand
,Page 2 of 32
As consumption rises, marginal utility tends to fall, explaining
downward-sloping demand.
3. Price elasticity of demand greater than 1 means demand is:
A. Inelastic
B. Unitary
C. Elastic
D. Perfectly inelastic
Quantity demanded responds proportionally more than price
changes when elasticity > 1.
4. A binding price ceiling set below equilibrium produces:
A. Surplus
B. Equilibrium price rise
C. Shortage
D. No effect
Quantity demanded exceeds quantity supplied at the capped
price.
5. A firm in perfect competition maximizes profit by producing
where:
A. Price = average cost
B. Price = marginal cost
C. Marginal cost = average cost
D. Price > marginal cost
Firm is price taker; produce until P = MC.
6. A monopolist sets output where MR = MC and charges:
A. Price = MR
B. Price = MC
C. Price > MC (on demand curve)
D. Price = zero
Monopoly markup yields price above marginal cost.
7. In the long run under perfect competition, economic profits are:
A. Positive
B. Negative
C. Zero (normal profit)
D. Indeterminate
Free entry/exit drives profits to normal levels.
,Page 3 of 32
8. Comparative advantage means a country can produce a good:
A. With more resources always
B. At lower opportunity cost
C. Using fewer workers only
D. Only if it has absolute advantage
Trade gains arise from lower opportunity costs, not absolute
productivity.
9. The bowed-out shape of a production possibilities frontier
indicates:
A. Constant opportunity cost
B. No scarcity
C. Increasing opportunity costs
D. Unlimited resources
Specialized resources make transfers increasingly costly.
10. Consumer surplus equals:
A. Producer revenue
B. Government tax revenue
C. Willingness to pay minus price
D. Total quantity sold
Measures net benefit consumers receive above the price paid.
11. If TR = TC for a firm, economic profit is:
A. Positive
B. Negative
C. Zero
D. Undefined
Accounting for opportunity costs, zero economic profit is normal
profit.
12. A natural monopoly typically arises because:
A. Demand is tiny
B. One firm has declining average cost over market demand
C. Technology is identical across firms
D. Low fixed costs exist
High fixed costs and economies of scale favor a single provider.
13. Negative cross-price elasticity between two goods indicates
they are:
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A. Substitutes
B. Complements
C. Independent
D. Inferior
An increase in price of one good lowers demand for the other.
14. Diminishing marginal returns implies marginal cost will:
A. Decrease forever
B. Increase after a point
C. Stay constant
D. Be zero
When marginal product falls, producing additional units
becomes costlier.
15. In the short run, a firm should shut down if price is:
A. Above ATC
B. Below average variable cost (AVC)
C. Equal to marginal cost
D. Greater than zero always
If price doesn't cover variable costs, producing increases losses
over shutting down.
16. Moral hazard occurs when:
A. Consumers lack information
B. Agents change behavior because they are insured or
protected
C. Markets are perfectly competitive
D. Prices are flexible
Insurance can lead to riskier choices since consequences are
shifted.
17. If MPC = 0.8, the simple spending multiplier equals:
A. 1.25
B. 0.8
C. 5
D. 0.2
Multiplier = 1 / (1 − MPC) = .2 = 5.
18. Real GDP differs from nominal GDP because it:
A. Uses current prices only
