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WGU BUSINESS -PRINCIPLES OF ECONOMICS D089:
EXAM QUESTIONS WITH DETAILED- VERIFIED ANSWERS-
ALREADY GRADED A+ | NEWEST EXAM
Business Administration / Economics Curriculum
Exam coverage: -
• Fundamentals (Scarcity, Opportunity Cost, PPF, Economic Systems): -
1–15
• Microeconomics (Supply, Demand, Elasticity, Market Structures): -16–
35
• Macroeconomics (GDP, Unemployment, Inflation, Business Cycle): -
36–60
• International Trade (Comparative Advantage, Tariffs, Quotas): - 61–75
• Macroeconomics – GDP, Unemployment, and Inflation: -76–95
• Macroeconomics – Monetary and Fiscal Policy: - 96–115
• Microeconomics – Market Structures and Costs: - 116–135
• Macroeconomics – International Trade and Additional Topics: - 136–150
Practice Questions
Section 1: Fundamentals (Questions 1–15)
1. Economics is best defined as the study of:
A. Money and banking
B. Business management
C. Scarcity and choice
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D. Government spending and taxation
Correct Answer: C. Scarcity and choice
Rationale: Economics examines how individuals and societies allocate
scarce resources to satisfy unlimited wants.
2. Opportunity cost refers to:
A. The total monetary cost of a decision
B. The value of the next best alternative foregone
C. The total accounting cost of production
D. Fixed expenses that cannot be recovered
Correct Answer: B. The value of the next best alternative foregone
Rationale: Opportunity cost measures what is sacrificed when one option is
chosen over another.
3. Which of the following is an example of a positive economic statement?
A. Taxes should be lowered to stimulate the economy
B. Healthcare ought to be provided to all citizens
C. Raising the minimum wage increases unemployment
D. The government must take action to reduce inequality
Correct Answer: C. Raising the minimum wage increases unemployment
Rationale: Positive statements describe facts or cause-and-effect
relationships that can be tested.
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4. Scarcity is the reason economic choices are made. Which of the following
best describes scarcity?
A. The gap between limited resources and theoretically limitless wants
B. The excess of goods and services available
C. A situation where all resources are fully utilized
D. The equal distribution of resources among all people
Correct Answer: A. The gap between limited resources and theoretically
limitless wants
Rationale: Scarcity is the basic economic problem—the gap between
limited, scarce resources and limitless wants.
5. A movement along the demand curve is caused by:
A. A change in consumer income
B. A change in the price of the good itself
C. A change in consumer tastes
D. A change in population size
Correct Answer: B. A change in the price of the good itself
Rationale: Only a change in price causes movement along the demand
curve; other factors shift the entire curve.
6. Which factor would shift the demand curve for a normal good to the right?
A. A decrease in consumer income
B. An increase in the price of a substitute
C. A decrease in population
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D. An increase in the price of the good
Correct Answer: B. An increase in the price of a substitute
Rationale: An increase in the price of a substitute makes the original good
relatively more attractive, increasing demand and shifting the curve
rightward.
7. According to the law of demand, when the price of a good increase:
A. The quantity demanded increases
B. The quantity demanded decreases
C. The demand curve shifts to the right
D. The supply curve shifts to the left
Correct Answer: B. The quantity demanded decreases
Rationale: The law of demand states there is an inverse relationship between
price and quantity demanded—as price rises, quantity demanded falls.
8. Which of the following is a public good?
A. A slice of pizza
B. Electricity from a utility company
C. National defense
D. A private school education
Correct Answer: C. National defense
Rationale: Public goods are non-rival and non-excludable; national defense
benefits all citizens without exclusion.
9. A negative externality exists when:
WGU BUSINESS -PRINCIPLES OF ECONOMICS D089:
EXAM QUESTIONS WITH DETAILED- VERIFIED ANSWERS-
ALREADY GRADED A+ | NEWEST EXAM
Business Administration / Economics Curriculum
Exam coverage: -
• Fundamentals (Scarcity, Opportunity Cost, PPF, Economic Systems): -
1–15
• Microeconomics (Supply, Demand, Elasticity, Market Structures): -16–
35
• Macroeconomics (GDP, Unemployment, Inflation, Business Cycle): -
36–60
• International Trade (Comparative Advantage, Tariffs, Quotas): - 61–75
• Macroeconomics – GDP, Unemployment, and Inflation: -76–95
• Macroeconomics – Monetary and Fiscal Policy: - 96–115
• Microeconomics – Market Structures and Costs: - 116–135
• Macroeconomics – International Trade and Additional Topics: - 136–150
Practice Questions
Section 1: Fundamentals (Questions 1–15)
1. Economics is best defined as the study of:
A. Money and banking
B. Business management
C. Scarcity and choice
, Page 2 of 66
D. Government spending and taxation
Correct Answer: C. Scarcity and choice
Rationale: Economics examines how individuals and societies allocate
scarce resources to satisfy unlimited wants.
2. Opportunity cost refers to:
A. The total monetary cost of a decision
B. The value of the next best alternative foregone
C. The total accounting cost of production
D. Fixed expenses that cannot be recovered
Correct Answer: B. The value of the next best alternative foregone
Rationale: Opportunity cost measures what is sacrificed when one option is
chosen over another.
3. Which of the following is an example of a positive economic statement?
A. Taxes should be lowered to stimulate the economy
B. Healthcare ought to be provided to all citizens
C. Raising the minimum wage increases unemployment
D. The government must take action to reduce inequality
Correct Answer: C. Raising the minimum wage increases unemployment
Rationale: Positive statements describe facts or cause-and-effect
relationships that can be tested.
, Page 3 of 66
4. Scarcity is the reason economic choices are made. Which of the following
best describes scarcity?
A. The gap between limited resources and theoretically limitless wants
B. The excess of goods and services available
C. A situation where all resources are fully utilized
D. The equal distribution of resources among all people
Correct Answer: A. The gap between limited resources and theoretically
limitless wants
Rationale: Scarcity is the basic economic problem—the gap between
limited, scarce resources and limitless wants.
5. A movement along the demand curve is caused by:
A. A change in consumer income
B. A change in the price of the good itself
C. A change in consumer tastes
D. A change in population size
Correct Answer: B. A change in the price of the good itself
Rationale: Only a change in price causes movement along the demand
curve; other factors shift the entire curve.
6. Which factor would shift the demand curve for a normal good to the right?
A. A decrease in consumer income
B. An increase in the price of a substitute
C. A decrease in population
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D. An increase in the price of the good
Correct Answer: B. An increase in the price of a substitute
Rationale: An increase in the price of a substitute makes the original good
relatively more attractive, increasing demand and shifting the curve
rightward.
7. According to the law of demand, when the price of a good increase:
A. The quantity demanded increases
B. The quantity demanded decreases
C. The demand curve shifts to the right
D. The supply curve shifts to the left
Correct Answer: B. The quantity demanded decreases
Rationale: The law of demand states there is an inverse relationship between
price and quantity demanded—as price rises, quantity demanded falls.
8. Which of the following is a public good?
A. A slice of pizza
B. Electricity from a utility company
C. National defense
D. A private school education
Correct Answer: C. National defense
Rationale: Public goods are non-rival and non-excludable; national defense
benefits all citizens without exclusion.
9. A negative externality exists when:
