3. One important characteristic of the U.S. economy over recent decades is a widespread expansion in monopoly power. (15 points)
   1. What labor market parameter does this increase in monopoly power affect and why?
   2. Show the effect of this change on real wages and the natural rate of unemployment using the labor market model. Make sure to label your graph completely.
   3. Based on your answer to (b) what happens to real wages when the markup increases? Why?
   4. In the post-1970 U.S. economy, this rise in monopoly power has taken place alongside a series of institutional changes such as a decline in the prevalence of unions. What is the effect of these simultaneous changes on real wages and the natural rate of unemployment in the U.S. labor market? Support your answer graphically.