Please help me answer the question about the "last word" article and what you consider to be the most important points in the Last Word article!

\"Mom and Pop\" Operations Restaurants are monopolistic competitors. Because each one has a unique location, it has some monopoly power. Additional bits of monopoly power are generated by product differentiation. Restau. rants can differ on menu items, decor, speed of service, price, drive- through convenience, and a wide variety of additional characteristics. Restaurants also differ in their production methods. Compare a McDonald's hamburger restaurant with a small \"mom and pop" ham- burger stand. The McDonald's will have a huge amount of specialized equipment. There will be special machines for frying, microwavjng' making milkshakes, dispensing beverages into cups automatically of course cooking the hamburgers. There will also in most cases be digital touchscreen Computers for taking walk-up orders, wireless headsets for taking drive-through orders, and a fully computerized register system for keeping track of cash, credit, and debit transactions. And there will be a dining area that is often tastefully decorated at substantial expense. All these things imply that a McDonald's restaurant is capital intensive. It uses a large amount of capital equipment to produce and serve a hamburger. By contrast, a small mom-andpop hamburger stand will typically have only the bare minimum in terms of cooking equipmenta grill, a fryer, an unautomated beverage dispenser, and a refrigerator. Seat ing will be plain. The decor will be inexpensive and probably out of style. The mom-andpop hamburger stand will use relatively little capital to produce and serve a hamburger. In a monopolistically competitive restaurant market, equilibrium can often include both highly capitalized chain stores like McDon- ald's as well as lightly capitalized mom-andpop operations. As long as both types of hamburger restaurant can make zero economic prof- its, each type will have representatives in the local restaurant market. Economists have recently discovered, however, that wage increases can tilt the local restaurant market in favor of highly capi- talized chain stores. In particular, increases in the minimum wage tend to reduce the proportion of mom-and-pop restaurants. This happens because increases in the minimum wage have a rela- tively small impact on the cost curves of highly capitalized chain res- taurants. While it is true that a highly capitalized McDonald's does and Higher Wages, More McRestaurants In the Monopolistically Competitive Restaurant Market, Higher Wa ___\\______ Sorbis/Shutterstock hire minimum wage workers, the fact that it uses so much capital to produce hamburgers means that a large fraction of its costs derives from machinery and equipment. So when the minimum wage goes up, only a relatively minor part of its production costs go up. By contrast, momandpop restaurants use relatively little capital combined with lots of labor. So when the minimum wage is increased, the cost curves of mom-and-pop stores shift upward by more than the cost curves of highly capitalized chain restaurants. In both cases, eco- nomic prots will turn negativebut they will become much more nega- tive at the mom-and-pop restaurants, which are heavily reliant on labor. The result is a greater tendency on the part of mom-andpop res- taurants to exit the industry. Both types of restaurant will see exits. But when a new equilibrium is eventually reestablished, there will be a higher proportion of highly capitalized chain restaurants and a lower proportion of labor-intensive mom-andpop restaurants. Higher minimum wages are often promoted as a way to help low. wage workers. But they generate an unintended consequence in the monopolistically competitive restaurant market, where they favor big chain stores over small local operations. Voters and politicians may want to consider this when debating an increase in the minimum wage. Safari File Edit View History Bookmarks Window Help O X ) 40% Sun 7:21 PM Q DE . . . prod.reader-ui.prod.mheducation.com C Content Dashboard Class Professor Marotti Economics in Connect M Discussion Questions + 180 of 858 > O Aa involve. Explain now the entry of firms into its industry airects the demand curve racing a monoponsuc comm ator and its economic profit. LO13.1 [) ) 2. Compare the elasticity of a monopolistic competitor's den and with that a pure competitor and a pure mor not. Assuming identical long-run costs, compare graphican, the prices and outputs in the lon run under pure competition a under monopolistic competition. Contrast the two market structures in terms of products an i ally ative efficiency. Ey . Monopolistically competitive industries are populated by too many firms each of which rodin..