D089 Exam 3: Principles of Economics Verified and
Latest Questions and Answers - WGU
1. In a perfectly competitive market, how does a firm determine its profit-
maximizing level of output in the short run?
A. Where Marginal Revenue is greater than Marginal Cost
B. Where Price is equal to Average Fixed Cost
C. Where Average Total Cost is at its minimum
D. Where Marginal Revenue equals Marginal Cost
Answer: D
Explanation: Profit maximization for any firm occurs at the level of output where Marginal
Revenue (MR) equals Marginal Cost (MC). In perfect competition, MR is also equal to the
market price.
2. If the cross-price elasticity of demand between two goods is positive, the
goods are considered:
A. Substitutes
B. Inferior goods
C. Complements
D. Normal goods
Answer: A
Explanation: A positive cross-price elasticity means that as the price of one good
increases, the demand for the other good also increases, which is the definition of
substitute goods.
Latest Questions and Answers - WGU
1. In a perfectly competitive market, how does a firm determine its profit-
maximizing level of output in the short run?
A. Where Marginal Revenue is greater than Marginal Cost
B. Where Price is equal to Average Fixed Cost
C. Where Average Total Cost is at its minimum
D. Where Marginal Revenue equals Marginal Cost
Answer: D
Explanation: Profit maximization for any firm occurs at the level of output where Marginal
Revenue (MR) equals Marginal Cost (MC). In perfect competition, MR is also equal to the
market price.
2. If the cross-price elasticity of demand between two goods is positive, the
goods are considered:
A. Substitutes
B. Inferior goods
C. Complements
D. Normal goods
Answer: A
Explanation: A positive cross-price elasticity means that as the price of one good
increases, the demand for the other good also increases, which is the definition of
substitute goods.
