WGU D089 Study Guide Economics | Verified study
complete solutions | A+ Graded | 2026 Updates |
100% correct
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer?
a. What to produce?
b. How to produce it?
c. For whom are the goods or services produced?
2. What do economists mean when they say that people “think at the margin”?
a. Thinking about what the next step or an additional action means for a person. people
make better decisions when they consider if the additional benefit they gain from one
more unit is greater than the additional cost of that extra unit of a good or service.
i. Example: study one more hour; benefit is higher test grade; cost is losing an
hour of tv.
1. marginal benefit is the additional benefit you gain from consuming one
more of something (higher test grade)
2. marginal cost is the additional cost you incur from consuming that
additional unit (hour of tv you give up)
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
a. The standard of living for a nation is determined by its ability to produce goods &
services—There is a fundamental relationship between productivity & living standards.
,4. Using the 10 Principles of Economics, explain why trade is beneficial?
a. Trade allows people to concentrate on what they do best and exchange their ability with
others to supplement their own needs. This provides everyone involved with access to a
larger number and variety of goods and services.
5. How does printing money impact prices?
a. The more a government prints money, the less the money is worth, thus making goods
and services more expensive.
6. What are the differences between the Traditional and the Market economy?
a. Traditional economy —A system where individuals make decisions based on traditions,
beliefs, and customs
i. Families and tribes
ii. Hunter/gatherer
iii. Bartering and trade instead of money
iv. Only produces what it needs
v. Changes from purely trade to use of some type of currency
1. Advantages
2. Little competition or friction
3. Roles and contributions well understood
4. More sustainable than a tech based company
5. Disadvantages
6. Exposed to environmental changes and weather
7. Vulnerable to market command economies which consume traditional
b. Command economy (centralized)—A system where the government makes all the
decisions
i. Activity is planned and controlled
ii. Government decides how to use a distribute capital and resources
iii. Central power controls the priorities of how goods/services produces/distribute
iv. Domestic competition is overpowered
v. Businesses are required to follow specific hiring and production targets set by
the government
1. Advantages
2. goods, services, and resources are deployed without concern for
environmental or other regulatory issues
3. government can transform the entire society to fit the constraints of its
national vision through nationalizing industry and deciding where
workers will be placed
4. Disadvantages
5. Underlying black market economies tend to develop as a response to
difficult access to goods and services
6. Rationing commonly occurs due to poor planning and an inability to
meet societal demands
7. People are discouraged from innovating and are required to follow
orders and keep with the central plan
, c. Market economy (decentralized)—A system where businesses make decisions based on
consumer demand
i. Privately-owned goods and services are standard, and people and businesses
have the right to commercialize their property
ii. People can innovate, produce, sell, and purchase goods and services
iii. Prices, production, and job availability are driven by self-motivation and
competition
iv. The economy relies on market efficiency where producers and consumers have
access to the same information to make economic decisions
v. Government interference is limited to regulating safety, fair access,
environmental, and national defense issues
1. Advantages
2. Goods and services are readily available because consumers and
businesses have the freedom to negotiate prices
3. Production methods are efficient, which increases productivity and
profitability
4. Innovation is rewarded and encouraged
5. Individuals and organizations invest in successful ventures, which in turn
drive innovation and quality improvement
6. Disadvantages
7. Competition drives market economies, and, in many cases, there are not
enough mechanisms implemented to protect the underprivileged
8. tendency for labor resources to be under optimized because access to
education and skills improvement may not be affordable
9. can be a sharp contrast between the economic power of the privileged
versus the power of the underprivileged
d. Mixed economy —A system where businesses make decisions based on consumer
demand, but the government makes decisions in terms of regulations, consumer safety,
and environment
i. Advantages
ii. Goods and services are distributed to where they are needed the most. Prices
set by supply and demand
iii. Competition incentivizes innovation and improves the quality of products
iv. Goods & services are more available & accessible to those who are willing to
pay
v. role of the government is expanded to help ensure access for underprivileged
vi. Disadvantages
vii. emerge when there is too much emphasis on the goals of a particular market
decision maker
viii. could be too much/not enough freedom of choice for individuals
&organizations
ix. government may take its expanded role too far and limit competition, thus
discouraging innovation and quality
complete solutions | A+ Graded | 2026 Updates |
100% correct
Module 1 – The Economic Way of Thinking
1. What are the three fundamental questions every economy must answer?
a. What to produce?
b. How to produce it?
c. For whom are the goods or services produced?
2. What do economists mean when they say that people “think at the margin”?
a. Thinking about what the next step or an additional action means for a person. people
make better decisions when they consider if the additional benefit they gain from one
more unit is greater than the additional cost of that extra unit of a good or service.
i. Example: study one more hour; benefit is higher test grade; cost is losing an
hour of tv.
1. marginal benefit is the additional benefit you gain from consuming one
more of something (higher test grade)
2. marginal cost is the additional cost you incur from consuming that
additional unit (hour of tv you give up)
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
a. The standard of living for a nation is determined by its ability to produce goods &
services—There is a fundamental relationship between productivity & living standards.
,4. Using the 10 Principles of Economics, explain why trade is beneficial?
a. Trade allows people to concentrate on what they do best and exchange their ability with
others to supplement their own needs. This provides everyone involved with access to a
larger number and variety of goods and services.
5. How does printing money impact prices?
a. The more a government prints money, the less the money is worth, thus making goods
and services more expensive.
6. What are the differences between the Traditional and the Market economy?
a. Traditional economy —A system where individuals make decisions based on traditions,
beliefs, and customs
i. Families and tribes
ii. Hunter/gatherer
iii. Bartering and trade instead of money
iv. Only produces what it needs
v. Changes from purely trade to use of some type of currency
1. Advantages
2. Little competition or friction
3. Roles and contributions well understood
4. More sustainable than a tech based company
5. Disadvantages
6. Exposed to environmental changes and weather
7. Vulnerable to market command economies which consume traditional
b. Command economy (centralized)—A system where the government makes all the
decisions
i. Activity is planned and controlled
ii. Government decides how to use a distribute capital and resources
iii. Central power controls the priorities of how goods/services produces/distribute
iv. Domestic competition is overpowered
v. Businesses are required to follow specific hiring and production targets set by
the government
1. Advantages
2. goods, services, and resources are deployed without concern for
environmental or other regulatory issues
3. government can transform the entire society to fit the constraints of its
national vision through nationalizing industry and deciding where
workers will be placed
4. Disadvantages
5. Underlying black market economies tend to develop as a response to
difficult access to goods and services
6. Rationing commonly occurs due to poor planning and an inability to
meet societal demands
7. People are discouraged from innovating and are required to follow
orders and keep with the central plan
, c. Market economy (decentralized)—A system where businesses make decisions based on
consumer demand
i. Privately-owned goods and services are standard, and people and businesses
have the right to commercialize their property
ii. People can innovate, produce, sell, and purchase goods and services
iii. Prices, production, and job availability are driven by self-motivation and
competition
iv. The economy relies on market efficiency where producers and consumers have
access to the same information to make economic decisions
v. Government interference is limited to regulating safety, fair access,
environmental, and national defense issues
1. Advantages
2. Goods and services are readily available because consumers and
businesses have the freedom to negotiate prices
3. Production methods are efficient, which increases productivity and
profitability
4. Innovation is rewarded and encouraged
5. Individuals and organizations invest in successful ventures, which in turn
drive innovation and quality improvement
6. Disadvantages
7. Competition drives market economies, and, in many cases, there are not
enough mechanisms implemented to protect the underprivileged
8. tendency for labor resources to be under optimized because access to
education and skills improvement may not be affordable
9. can be a sharp contrast between the economic power of the privileged
versus the power of the underprivileged
d. Mixed economy —A system where businesses make decisions based on consumer
demand, but the government makes decisions in terms of regulations, consumer safety,
and environment
i. Advantages
ii. Goods and services are distributed to where they are needed the most. Prices
set by supply and demand
iii. Competition incentivizes innovation and improves the quality of products
iv. Goods & services are more available & accessible to those who are willing to
pay
v. role of the government is expanded to help ensure access for underprivileged
vi. Disadvantages
vii. emerge when there is too much emphasis on the goals of a particular market
decision maker
viii. could be too much/not enough freedom of choice for individuals
&organizations
ix. government may take its expanded role too far and limit competition, thus
discouraging innovation and quality
