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WGU Global Economics for Managers (C211, UZC2) Sample Questions (Q56-Q61):

NEW QUESTION # 56
What measures how the quantity demanded of one good responds to a change in the price of another good?

Answer: D

Explanation:
Cross-price elasticity of demand measures how the quantity demanded of one good changes in response to a price change in another good. Option A is correct because this concept identifies whether goods are substitutes or complements. If cross-price elasticity is positive, the goods are substitutes; when the price of one rises, demand for the other increases. For example, if coffee becomes more expensive, demand for tea may rise. If cross-price elasticity is negative, the goods are complements; when the price of one rises, demand for the other falls. For example, if printers become more expensive, demand for printer cartridges may decline. Price elasticity of demand measures responsiveness to the good's own price, not another good's price.
The other options are not standard terms.


NEW QUESTION # 57
When the Federal Reserve decreases the money supply, what is the result?

Answer: B

Explanation:
When the Federal Reserve decreases the money supply, aggregate demand decreases because borrowing becomes more expensive and less credit is available. Option B is correct because the quantity of goods and services demanded at any given price level falls. A lower money supply tends to raise interest rates, which discourages consumer borrowing, business investment, and interest-sensitive purchases such as homes, vehicles, and capital equipment. This shifts the aggregate demand curve left. Option A is not the standard macroeconomic result. Option C is too narrow and incorrectly states that demand increases. Option D is also incorrect because contractionary monetary policy does not directly increase aggregate demand for imports.
For managers, tighter monetary policy can reduce sales forecasts, investment plans, and expansion opportunities.


NEW QUESTION # 58
Which statement is true for a monopoly firm, but not for a competitive firm?

Answer: C

Explanation:
In Global Economics for Managers , a key distinction between monopolies and perfectly competitive firms is the relationship between price and marginal revenue . For a monopoly, marginal revenue is less than price
, making option C correct.
A monopoly faces a downward-sloping demand curve , meaning that to sell an additional unit, the firm must lower the price not only for the marginal unit but also for all previous units sold. As a result, marginal revenue declines faster than price and always lies below the demand curve.
In contrast, a perfectly competitive firm is a price taker . It can sell as much output as it wants at the market price, so marginal revenue equals price.
Options A and B describe competitive firms, not monopolies. Option D is incorrect because monopolies can earn economic profits in the long run due to entry barriers.
Thus, option C correctly identifies a feature unique to monopoly firms.


NEW QUESTION # 59
What is an example of a company that is market-seeking?

Answer: B

Explanation:
In Global Economics for Managers , a market-seeking company is one that invests in or enters a foreign location primarily to serve local or regional customers , making option C the correct answer. Market- seeking behavior is driven by demand-side considerations rather than cost or resource availability.
Option C describes a firm searching for a location where there is high consumer interest in camping supplies , which directly reflects a desire to access and serve a specific market. Such firms are motivated by factors like market size, growth potential, consumer preferences, and proximity to customers. Market-seeking firms often establish foreign subsidiaries, sales offices, or production facilities to adapt products to local tastes and respond quickly to demand.
Option A describes a resource-seeking firm, focused on obtaining low-cost or specialized inputs. Option B also reflects resource-seeking behavior, specifically in extractive industries. Option D describes a cost- seeking (efficiency-seeking) firm that locates production in regions with low labor costs.
Global Economics for Managers classifies foreign direct investment motives into market-seeking, resource- seeking, efficiency-seeking, and strategic asset-seeking. Market-seeking investment is particularly common in consumer goods and service industries, where understanding local preferences is critical for success.
For managers, recognizing market-seeking motives helps guide decisions about location, marketing strategy, and product adaptation. Thus, option C accurately illustrates a market-seeking company.


NEW QUESTION # 60
What is a key feature of an oligopoly?

Answer: A

Explanation:
InGlobal Economics for Managers, oligopolies are often modeled as aprisoner's dilemma, making option B correct.
Firms face incentives to cooperate for mutual gain but also incentives to cheat to maximize individual profit.
This tension explains price rigidity, collusion instability, and strategic behavior.
Other options describe competitive markets or are not universally true.
Thus, option B is correct.


NEW QUESTION # 61
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