Saylor Academy ECON101 Direct Credit
Questions and Answers
Question 1
The flu vaccination market has the demand and supply schedules given by the
following data. The market is at equilibrium and 70,000 vaccinations are demanded
and supplied when the price per vaccination is $20. The government realizes that that
each vaccination given generates an external benefit because individuals who do not
get vaccinated are also less likely to get the flu when other individuals do get
vaccinated. Consequently, the government gives each vaccinated person a direct and
immediate subsidy of $10 after they get and pay for their vaccination. What happens
in the market for vaccinations?
IMAGE
Correct Answer
-TRY There will be a shortage of 20,000 vaccinations.
-NOT There will be a shortage of 40,000 vaccinations.
Question 2
In addition to the information in the figure below, you are told that: (1) there is a fixed
cost of $1,000, and (2) a variable cost of $250 per worker per day. Taking all the
provided information into account what are the shapes of the production function
and total cost curve?
IMAGE
Correct Answer
*****
-NOT The production function and total-cost curve are increasing at a decreasing
rate
Page 1 of 19
,Question 3
In the figure below, what is the price elasticity of demand?
IMAGE
Correct Answer
+-TRY 4/5
-NOT 5/4
Question 4
What does the term "capital" refer to in economics?
Correct Answer
The equipment, and buildings used by firms
Question 5
According to the table below, what is the marginal product of the third and sixth
workers?
IMAGE
Correct Answer
1400 and 1200, respectively
Question 6
If a producer sells its product in a perfectly competitive market, then:
Correct Answer
-TRY the total cost must be a constant multiple of its quantity of output.
-NOT the total revenue must be equal to its average revenue.
Question 7
Which of the following is a normative statement?
Correct Answer
Corporate profits are too high
Page 2 of 19
, Question 8
According to the figure below, what are the long term continuing prospects for this
particular market?
Correct Answer
-TRY There will be fewer producers because less cost-effective producers will exit
the market.
-NOT There will be more producers because more efficient producers will enter the
market.
Question 9
Of the following market structures, which has both ease of entry and ease of exit from
the market?
Correct Answer
Perfect competition
Question 10
The Smith family's income increases by 25%. What impact will this have on their
spending habits?
Correct Answer
There will be a shift in demand for all goods, and the Smiths will consume more
compared to before the increase in income.
Question 11
Which of the following is a positive statement?
Correct Answer
Banks make a 20% annual profit
Page 3 of 19
Questions and Answers
Question 1
The flu vaccination market has the demand and supply schedules given by the
following data. The market is at equilibrium and 70,000 vaccinations are demanded
and supplied when the price per vaccination is $20. The government realizes that that
each vaccination given generates an external benefit because individuals who do not
get vaccinated are also less likely to get the flu when other individuals do get
vaccinated. Consequently, the government gives each vaccinated person a direct and
immediate subsidy of $10 after they get and pay for their vaccination. What happens
in the market for vaccinations?
IMAGE
Correct Answer
-TRY There will be a shortage of 20,000 vaccinations.
-NOT There will be a shortage of 40,000 vaccinations.
Question 2
In addition to the information in the figure below, you are told that: (1) there is a fixed
cost of $1,000, and (2) a variable cost of $250 per worker per day. Taking all the
provided information into account what are the shapes of the production function
and total cost curve?
IMAGE
Correct Answer
*****
-NOT The production function and total-cost curve are increasing at a decreasing
rate
Page 1 of 19
,Question 3
In the figure below, what is the price elasticity of demand?
IMAGE
Correct Answer
+-TRY 4/5
-NOT 5/4
Question 4
What does the term "capital" refer to in economics?
Correct Answer
The equipment, and buildings used by firms
Question 5
According to the table below, what is the marginal product of the third and sixth
workers?
IMAGE
Correct Answer
1400 and 1200, respectively
Question 6
If a producer sells its product in a perfectly competitive market, then:
Correct Answer
-TRY the total cost must be a constant multiple of its quantity of output.
-NOT the total revenue must be equal to its average revenue.
Question 7
Which of the following is a normative statement?
Correct Answer
Corporate profits are too high
Page 2 of 19
, Question 8
According to the figure below, what are the long term continuing prospects for this
particular market?
Correct Answer
-TRY There will be fewer producers because less cost-effective producers will exit
the market.
-NOT There will be more producers because more efficient producers will enter the
market.
Question 9
Of the following market structures, which has both ease of entry and ease of exit from
the market?
Correct Answer
Perfect competition
Question 10
The Smith family's income increases by 25%. What impact will this have on their
spending habits?
Correct Answer
There will be a shift in demand for all goods, and the Smiths will consume more
compared to before the increase in income.
Question 11
Which of the following is a positive statement?
Correct Answer
Banks make a 20% annual profit
Page 3 of 19
