1 Suppliers of factors of production in a perfectly competitive market respond to higher factor prices by of their factors, ceteris paribus. ANSWER CHOICES: A) changing the quality B) increasing the productivity C) decreasing the productivity D) increasing the quantity available E) decreasing the quantity available Question 2 In the factor market, ________ make up demand and ________ provide the supply. ANSWER CHOICES: A) households: businesses B) households: the government C) households; entrepreneurs D) government business firms E) businesses; households Question 3 The number of units of output that a machine will produce decreases, ceteris paribus. What will this do to the demand for this capital? ANSWER CHOICES: A) Demand will increase. B) Demand will decrease. C) There will be no change in demand. D) Demand will not change, but quantity demanded will decrease. E) Demand will not change, but quantity demanded will increase. Question 4 If the demand for product Y increases significantly, then ANSWER CHOICES: A) the demand for the labor used to make Y decreases B) the quantity of labor supplied to produce Y will decrease C) the supply of labor to produce Y will increase D) only the quantity demanded of labor increases E) the demand for the labor used to make Y increases Question 5 Advanced robotics become a much stronger substitute production factor than labor to produce Good A. At the same time, the government increases licensing requirements to be a laborer producing Good A. What would happen to the market equilibrium quantity of labor and wage rate for specialized labor to produce A? ANSWER CHOICES: A) The quantity of labor increases, and the wage rate increases. B) The quantity of labor decreases, and the wage rate increases. C) The effect on the quantity of labor is indeterminate, and the wage rate decreases. D) The quantity of labor decreases, and the effect on the wage rate is indeterminate. E) The quantity of labor and the wage rate both remain constant. Question 6 If the wage in a perfectly competitive labor market is $15 and the marginal product of the last worker employed is 3 units, what must be the market price for the good being produced? Assume a perfectly competitive output market. ANSWER CHOICES: A) $5 B) $12 C) $15 D) $18 E) $45 Question 7 A firm in a perfectly competitive labor market is employing labor where the marginal revenue product of the last unit is $30 and the marginal factor cost is $30. Based on this, the firm should ANSWER CHOICES: A) employ more units of labor B) employ fewer units of labor C) employ the same amount of labor D) lower its offered wage for labor E) increase its offered wage for labor Question 8 Which of the following is correct about a monopsonistic market? ANSWER CHOICES: A) Resources are efficiently allocated. B) There is one buyer for an indeterminate number of sellers. C) The monopsony has the same quantity transacted as in a perfectly competitive market.. D) The supply curve is horizontal and is equal to the average cost of labor. E) Purchase of an additional unit decreases the price of that unit and of the existing units being purchased. Question 9 There is one buyer for an indeterminate number of sellers. This describes ANSWER CHOICES: A) perfect competition B) monopolistic competition C) an oligopoly D) a monopoly E) a monopsony Question 10 In a monopsonistic market, firms will hire where ________ equals marginal revenue product and pay a ________ down to the supply curve. ANSWER CHOICES: A) demand; wage rate B) demand; product price C) marginal resource cost; wage rate D) marginal resource cost; product price E) marginal factor cost; product price