WGU D089 Study Guide Economic Way of thinking | Actual
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? Give an example of a
“What” question.
-What to produce? How to produce it? For whom to produce?
2. What do economists mean when they say that people “think at the margin”?
-People should compare things as what they will gain for one extra unit vs what they are losing
to make the best decision.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
-By its ability to produce goods and services.
4. Using the 10 Principles of Economics, explain why trade is beneficial?
-Trade can leave everyone in a better position. It allows countries to focus on what they produce
best and trade for the things they do not specialize in.
5. How does printing money impact prices?
-The more money available, the less valuable it becomes, making goods and services more
expensive.
6. What are the differences between the Traditional and the Market economy?
-Traditional economy decisions are based on beliefs and customs. Market economy decisions are
based on consumer demand. 7. Identify two disadvantages of a Command economy?
-Rationing often occurs due to poor planning and people are discouraged from innovating.
8. Explain one of the advantages of the Mixed economy?
-Goods and services are more available and accessible to those who are willing to pay.
9. How are macroeconomics and microeconomics different?
-Microeconomics deals with businesses and individuals whereas macroeconomics deals with
national and global economic systems.
10. Give an example of a normative statement.
-Forcing people to get a vaccine is wrong and unfair.
11. Identify the payment that goes to each of the four factors of production.
-Rent for land or buildings (natural resources), wages and salaries (labor), interest and dividends
for the use of financial capital, and profit for entrepreneurship.
12. What does the circular flow diagram depict?
-Examines the relationship between firms and households.
, Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
-There will never be enough resources so we must make decisions on what to produce, there will
always be an opportunity cost.
2. What does an individual’s budget constraint identify?
-The income restraints on what an individual can purchase.
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
6. Identify the points on the above graph that are efficient. Why are these efficient?
7. What does the PPF look like when resources are homogeneous?
8. How does an increase in labor productivity change the PPF?
9. Define the term Opportunity Cost.
10. What causes increasing opportunity costs?
11. Using the information below, what is the opportunity cost of a pound of beef when production is
increased from 100 lbs/month to 200 lbs/month?
Module 3 – Supply, Demand and Elasticity
1. Explain the “Law of Demand” using a demand curve to illustrate the concept.
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? Give an example of a
“What” question.
-What to produce? How to produce it? For whom to produce?
2. What do economists mean when they say that people “think at the margin”?
-People should compare things as what they will gain for one extra unit vs what they are losing
to make the best decision.
3. According to the 10 Principles of Economics, what determines a nation’s standard of living?
-By its ability to produce goods and services.
4. Using the 10 Principles of Economics, explain why trade is beneficial?
-Trade can leave everyone in a better position. It allows countries to focus on what they produce
best and trade for the things they do not specialize in.
5. How does printing money impact prices?
-The more money available, the less valuable it becomes, making goods and services more
expensive.
6. What are the differences between the Traditional and the Market economy?
-Traditional economy decisions are based on beliefs and customs. Market economy decisions are
based on consumer demand. 7. Identify two disadvantages of a Command economy?
-Rationing often occurs due to poor planning and people are discouraged from innovating.
8. Explain one of the advantages of the Mixed economy?
-Goods and services are more available and accessible to those who are willing to pay.
9. How are macroeconomics and microeconomics different?
-Microeconomics deals with businesses and individuals whereas macroeconomics deals with
national and global economic systems.
10. Give an example of a normative statement.
-Forcing people to get a vaccine is wrong and unfair.
11. Identify the payment that goes to each of the four factors of production.
-Rent for land or buildings (natural resources), wages and salaries (labor), interest and dividends
for the use of financial capital, and profit for entrepreneurship.
12. What does the circular flow diagram depict?
-Examines the relationship between firms and households.
, Module 2 – The Economic Problem
1. Why is the concept of scarcity so important in economics?
-There will never be enough resources so we must make decisions on what to produce, there will
always be an opportunity cost.
2. What does an individual’s budget constraint identify?
-The income restraints on what an individual can purchase.
3. Identify two ways in which the budget constraint and the PPF are similar and two ways in which
they are different.
4. Using the graph below, explain the trade-off associated with a movement from Point A to Point
B.
5. Using the graph above, explain why there is no trade-off associated with the movement from
Point C to Point B.
6. Identify the points on the above graph that are efficient. Why are these efficient?
7. What does the PPF look like when resources are homogeneous?
8. How does an increase in labor productivity change the PPF?
9. Define the term Opportunity Cost.
10. What causes increasing opportunity costs?
11. Using the information below, what is the opportunity cost of a pound of beef when production is
increased from 100 lbs/month to 200 lbs/month?
Module 3 – Supply, Demand and Elasticity
1. Explain the “Law of Demand” using a demand curve to illustrate the concept.
