1.Suppliers of factors of production in a perfectly competitive market respond to higher factor prices by ________ of their factors, ceteris paribus. (3 points)

changing the quality

increasing the productivity

decreasing the productivity

increasing the quantity available

decreasing the quantity available

2.

The quantity of labor demanded is ________ related to the wage rate, while the quantity of labor supplied is ________ related to the wage rate, ceteris paribus. (3 points)

positively; positively

negatively; positively

positively; negatively

negatively; negatively

negatively; not

3.The price of a product that a machine will produce increases, ceteris paribus. What will this do to the demand for this machine? (3 points)

Demand for the machine will increase.

Demand for the machine will decrease.

There will be no change in demand for the machine.

Demand will not change, but quantity demanded will decrease.

Demand will not change, but quantity demanded will increase.

4.Use the graph to answer the question that follows. (3 points)

\fQuantity of Labor MP of Labor Quantity of Capital MP of Capital 1 30 1 50 2 25 2 40 3 20 3 35 4 15 4 15 5 10 5 5 Market Firm Price of Output Quantity Supplied of Output Quantity Demanded of Output Quantity of Labor Total Product $5 25,000 60,000 0 0 $10 50,000 50,000 15 105 $15 75,000 40,000 30 190 $20 100,000 30,000 45 265 $25 125,000 20,000 60 325