D089 Exam 2: Principles of Economics Verified and
Latest Questions and Answers - WGU
1. What is the fundamental economic problem that arises because resources are
limited while human wants are unlimited?
A. Scarcity
B. Inflation
C. Recession
D. Surplus
Answer: A
Explanation: Scarcity is the central problem of economics, referring to the tension
between infinite wants and finite resources.
2. If the price of coffee increases, and the demand for tea increases as a result,
how are these two goods classified?
A. Substitute goods
B. Inferior goods
C. Complementary goods
D. Normal goods
Answer: A
Explanation: Substitute goods see an increase in demand when the price of a related good
rises, as consumers switch to the cheaper alternative.
,3. Which of the following is an example of an implicit cost for a business owner?
A. Wages paid to employees
B. Rent paid for a storefront
C. Electricity bills
D. Forgone salary from a previous job
Answer: D
Explanation: Implicit costs are opportunity costs that do not involve a direct payment of
money, such as the value of the owner’s time or alternative income.
4. In the context of the Production Possibilities Frontier (PPF), a point located
inside the curve represents:
A. Inefficient use of resources
B. Efficient use of all resources
C. Inflexible technology
D. An unattainable level of production
Answer: A
Explanation: Any point inside the PPF indicates that the economy is not using all its
resources or is using them inefficiently.
5. According to the Law of Demand, what is the relationship between price and
quantity demanded?
A. No relationship
B. A direct relationship
C. An inverse relationship
D. A constant relationship
Answer: C
Explanation: The Law of Demand states that as price increases, quantity demanded
decreases, and vice versa (ceteris paribus).
, 6. If the Price Elasticity of Demand for a product is 2.5, the demand is
considered:
A. Inelastic
B. Unit elastic
C. Perfectly inelastic
D. Elastic
Answer: D
Explanation: When the absolute value of the price elasticity of demand is greater than 1,
demand is classified as elastic.
7. Which market structure is characterized by a single seller and unique
products with no close substitutes?
A. Monopoly
B. Perfect Competition
C. Monopolistic Competition
D. Oligopoly
Answer: A
Explanation: A monopoly exists when one firm controls the entire market for a good or
service without substitutes.
8. Which of the following is included in the calculation of GDP using the
expenditure approach?
A. Intermediate goods
B. Government transfer payments
C. Sale of used goods
D. Net exports
Answer: D
Explanation: GDP = C + I + G + (X - M). Net exports (X-M) is one of the four main
components of the expenditure approach.
Latest Questions and Answers - WGU
1. What is the fundamental economic problem that arises because resources are
limited while human wants are unlimited?
A. Scarcity
B. Inflation
C. Recession
D. Surplus
Answer: A
Explanation: Scarcity is the central problem of economics, referring to the tension
between infinite wants and finite resources.
2. If the price of coffee increases, and the demand for tea increases as a result,
how are these two goods classified?
A. Substitute goods
B. Inferior goods
C. Complementary goods
D. Normal goods
Answer: A
Explanation: Substitute goods see an increase in demand when the price of a related good
rises, as consumers switch to the cheaper alternative.
,3. Which of the following is an example of an implicit cost for a business owner?
A. Wages paid to employees
B. Rent paid for a storefront
C. Electricity bills
D. Forgone salary from a previous job
Answer: D
Explanation: Implicit costs are opportunity costs that do not involve a direct payment of
money, such as the value of the owner’s time or alternative income.
4. In the context of the Production Possibilities Frontier (PPF), a point located
inside the curve represents:
A. Inefficient use of resources
B. Efficient use of all resources
C. Inflexible technology
D. An unattainable level of production
Answer: A
Explanation: Any point inside the PPF indicates that the economy is not using all its
resources or is using them inefficiently.
5. According to the Law of Demand, what is the relationship between price and
quantity demanded?
A. No relationship
B. A direct relationship
C. An inverse relationship
D. A constant relationship
Answer: C
Explanation: The Law of Demand states that as price increases, quantity demanded
decreases, and vice versa (ceteris paribus).
, 6. If the Price Elasticity of Demand for a product is 2.5, the demand is
considered:
A. Inelastic
B. Unit elastic
C. Perfectly inelastic
D. Elastic
Answer: D
Explanation: When the absolute value of the price elasticity of demand is greater than 1,
demand is classified as elastic.
7. Which market structure is characterized by a single seller and unique
products with no close substitutes?
A. Monopoly
B. Perfect Competition
C. Monopolistic Competition
D. Oligopoly
Answer: A
Explanation: A monopoly exists when one firm controls the entire market for a good or
service without substitutes.
8. Which of the following is included in the calculation of GDP using the
expenditure approach?
A. Intermediate goods
B. Government transfer payments
C. Sale of used goods
D. Net exports
Answer: D
Explanation: GDP = C + I + G + (X - M). Net exports (X-M) is one of the four main
components of the expenditure approach.
