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WGU Global Economics for Managers (C211, UZC2) Sample Questions (Q100-Q105):

NEW QUESTION # 100
Managers and firms rationally pursue their interests and make choices within institutional constraints.
Which situation illustrates this proposition of the institution-based view of global business?

A. A firm increases advertising to boost brand awareness.
B. A firm lowers prices to gain market share.
C. A multinational relocates production after a minimum wage increase.
D. A firm introduces a new product due to consumer trends.

Answer: C

Explanation:
InGlobal Economics for Managers, a core proposition of theinstitution-based viewis that firms make rational decisionswithin institutional constraints, making option C correct.
When a country raises its minimum wage, labor costs increase due to a formal institutional change. A multinational firm responding by relocating production to a lower-cost country demonstrates rational behavior shaped by institutional rules.
Options A, B, and D reflect competitive strategy but do not directly involve institutional constraints.
Therefore, option C correctly illustrates the institution-based view.

NEW QUESTION # 101
What are common types of barriers to entry that can cause a monopoly? (Choose TWO.)

A. Elastic demand
B. Free entry and exit
C. A single firm owning a key resource
D. Economies of scale in the production process
E. Perfect information

Answer: C,D

Explanation:
InGlobal Economics for Managers, monopolies arise whenbarriers to entryprevent competitors from entering a market. Two common barriers arecontrol of a key resourceandeconomies of scale, making options A and B correct.
When a single firm owns a unique or scarce resource, competitors cannot produce the good without access to that resource. Economies of scale create monopolies when one firm can produce at a lower average cost than multiple firms due to high fixed costs.
Options C, D, and E promote competition rather than monopoly.
Thus, options A and B correctly identify monopoly-creating barriers to entry.

NEW QUESTION # 102
What are represented by formal institutions?

A. Social norms
B. Cultural beliefs
C. Traditions
D. Laws

Answer: D

Explanation:
InGlobal Economics for Managers,formal institutionsare represented primarily bylaws, making option C correct. Formal institutions include constitutions, statutes, regulations, contracts, and property rights that are officially codified and enforced by governments or legal authorities.
These institutions reduce uncertainty by clearly defining acceptable behavior and outlining consequences for violations. For firms, formal institutions establish the legal framework for business operations, including rules governing entry, competition, taxation, and dispute resolution.
Options A, B, and D describeinformal institutions, which are unwritten and enforced through social mechanisms rather than legal authority.
Therefore, option C correctly identifies laws as representations of formal institutions.

NEW QUESTION # 103
What is a characteristic of a market economy?

A. Central planning determines production decisions.
B. Prices are fixed by the government.
C. Resources are allocated through quotas.
D. Factors of production are privately owned.

Answer: D

Explanation:
InGlobal Economics for Managers, amarket economyis characterized byprivate ownership of the factors of production, making option B correct. Individuals and firms own land, labor, capital, and entrepreneurship, and decisions are guided by market prices rather than central planning.
Private ownership creates incentives for efficiency, innovation, and investment. Prices emerge from supply and demand, coordinating economic activity through what Adam Smith described as the "invisible hand." Options A, C, and D describe command economies, not market economies.
Thus, option B correctly identifies a defining feature of a market economy.

NEW QUESTION # 104
Which goods have a positive cross-price elasticity?

A. Normal goods
B. Shortage goods
C. Complements
D. Substitutes

Answer: D

Explanation:
InGlobal Economics for Managers,substitute goodshave apositive cross-price elasticity of demand, making option C correct. Cross-price elasticity measures how the quantity demanded of one good responds to a change in the price of another good.
For substitutes, an increase in the price of one good leads consumers to switch to the alternative, increasing demand for the substitute. This positive relationship results in a positive cross-price elasticity. Examples include tea and coffee or butter and margarine.
Complements have negative cross-price elasticity, normal goods relate to income elasticity, and "shortage goods" is not an elasticity classification.
Thus, option C is correct.

NEW QUESTION # 105
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