Understanding Factor Markets and Least Cost Rule

What is the equilibrium price labeled as in the resource market for machines?

• P E

• P Q

• P R

• P M

In a perfectly competitive resource market, how is the supply curve for machines described?

• Vertical

• Upward sloping

• Downward sloping

• Horizontal

What happens to the marginal revenue product of machines when the demand for widgets decreases?

• It becomes zero

• It remains the same

• It decreases

• It increases

Why does the marginal revenue product of machines fall when the price of widgets decreases?

• Because the marginal product increases

• Because the marginal product decreases

• Because the additional revenue from each machine decreases

• Because the price of machines increases

According to the least cost rule, what should be equalized to minimize production costs?

• Total cost of resources

• Marginal product per dollar spent

• Total output produced

• Price of labor and machines