WGU D089 PRINCIPLES OF ECONOMICS EXAM VERSION A & B
LATEST 2024-2025 COMPLETE 350 QUESTIONS AND DETAILED
CORRECT ANSWERS JUST RELEASED
WGU D089 PRINCIPLES OF ECONOMICS EXAM A
Q: What causes changes in demand (shifts in the demand curve)? - ANSWER-- Changes in
consumer income, tastes, and preferences
- The size of the population
- prices of other goods such as complements and substitutes
- expectations about the future.
Q: What fundamental similarity do nearly all demand curves share? - ANSWER-They slope down
from left to right
Q: What is the positive relationship between price and quantity known as? - ANSWER-The law
of supply
Q: What does the law of supply assume? - ANSWER-That all variables affecting supply, other
than price, remain constant
Q: What does a rise in the price of a good or service increase? - ANSWER-The quantity supplied
of that good or service
Q: What does a supply curve depict? - ANSWER-The relationship between the price of a good or
service and the quantities companies are willing to sell at those prices
Q: What is a supply schedule? - ANSWER-A table view of the price-quantity pairing that
compose the supply curve.
1
,Page 2 of 132
Q: What will suppliers do to adjust for non-price changes related to the determinants of
supply? - ANSWER-Shift production
Q: What will suppliers do to adjust for price-related changes on the supply curve? - ANSWER-
Move production levels
Q: what are changes in supply (shifts in the supply curve) caused by? - ANSWER-Prices of inputs,
technology,expectations, number of sellers, and government policies and regulations
Q: What fundamental similarity do nearly all supply curves share? - ANSWER-They slope up
from left to right
Q: When does the equilibrium price and equilibrium quantity occur? - ANSWER-Where the
supply and demand curves cross.
Q: When does equilibrium occur? - ANSWER-When the quantity demanded is equal to the
quantity supplied
Q: Why would the price be below the equilibrium level? - ANSWER-The quantity demanded will
exceed the quantity supplied. -- Excess demand or a shortage will exist.
Q: What is occurring if the price is above the equilibrium level? - ANSWER-The quantity supplied
will exceed the quantity demanded. -- Excess supply or a surplus will exist
Q: When does the equilibrium in the market change? - ANSWER-When an event shifts either
the supply or demand curve
Q: What does price elasticity measure? - ANSWER-The responsiveness of the quantity
demanded or supplied of a good to a change in its price.
2
,Page 3 of 132
Q: How is price elasticity of demand calculated? - ANSWER-% change in quantity demand / %
change in price
Q: What are the three ways to describe elasticity? - ANSWER-- Elastic (Quantity is very
responsive)
- Unit Elastic (equal change in quantity)
- Inelastic (Quantity is not very responsive)
Q: What is indicated by an elastic demand or supply curve? - ANSWER-The quantity demanded
or supplied responds to price changes in a greater than proportional manner.
Q: What is indicated by an inelastic demand or supply curve? - ANSWER-A given percentage
change in price will cause a smaller percentage change in the quantity demanded or supplied.
Q: What is indicated by a unitary elasticity demand or supply curve? - ANSWER-A given
percentage change in price leads to an equal percentage change in the quantity demanded or
supplied.
Q: What happens if demand is inelastic? - ANSWER-An increase in price causes an increase in
total revenue.
Q: What happens if demand is elastic? - ANSWER-An increase in price causes a decrease in total
revenue
Q: Why would a price floor or a price ceiling be imposed? - ANSWER-It will prevent a market
from adjusting to its equilibrium price and quantity and thus will create an inefficient outcome
3
, Page 4 of 132
Q: What is the outcome of a price ceiling being set below the equilibrium price? - ANSWER-
Quantity demanded will exceed quantity supplied and excess demand or shortages will result.
Q: What is the outcome of a price floor being set above the equilibrium price? - ANSWER-
Quantity supplied will exceed quantity demanded and excess supply or surpluses will result.
Q: When might government-imposed price controls have a positive effect - ANSWER-If they are
used to correct an existing market failure
Q: What happens when price controls are applied to well-functioning markets? - ANSWER-The
market outcome is inefficient
Q: What happens to market outcomes when information about the quality of products is
imperfect? - ANSWER-Market outcomes will be inefficient
Q: What does a buyer rely on to judge the quality of products when confronted with imperfect
information? - ANSWER-Price
Q: What is the result of buyer's relying on price to indicate the quality of products when
confronted with imperfect information? - ANSWER-Markets may have difficulty reaching an
equilibrium price and quantity
Q: In high-quality or medium quality goods markets with imperfect information where sellers
find it difficult to demonstrate the quality of their goods to buyers, what are buyer's unwilling
to do? - ANSWER-Pay a higher price for the goods
Q: What can imperfect information lean to? - ANSWER-Riskier behavior due to moral hazard
Q: What are used to mitigate the risk of imperfect information? - ANSWER-Guarantees,
warranties, and service contracts
4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller STUVIAGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $20.99. You're not tied to anything after your purchase.
