THE FOLLOWING QUESTIONS RELATE TO MONOPOLISTIC (DIFFERENTIATED) COMPETITION AND OLIGOPOLY.

A. A major advantage of monopolistic (differentiated) competition over pure competition is "product variety." Fully explain.

B. Give an example of inter-industry competition. Explain how such competition can reduce the market power of an oligopoly firm such as U.S. Steel Company.

C. Do you feel advertising is a benefit or a drawback to our society? Fully explain your answer.

D. Although it is illegal, why is there so much pressure on oligopoly firms to collude on prices?

THE FOLLOWING QUESTIONS RELATE TO THE ELASTICITY Of DEMAND FOR A RESOURCE.

A. Given the same 20% wage increase, who would have the more inelastic demand for their services at a popular Italian restaurant in Myrtle Beach:a waiter or the head chef?Explain your answer.

B. Who is more likely to get a raise: Mary, who works at a firm where labor is 80% of the total cost of the product the firm produces, or Judy, who works at a firm where labor is 10% of the total cost of the product the firm produces? Explain your answer in terms of elasticity.

C. Which worker here is more likely to get a 10% raise:Ethel, who has a job at the only firm in the U.S. that offers cyber security training for the military, or Lucy, who works at a fast-food restaurant.

THE FOLLOWING QUESTIONS RELATE TO DEMAND AND SUPPLY FACTORS IN THE LABOR MARKET.

A. Roger, a C student in college and a moderately productive worker at his firm, has been employed at the Yellow Brick Road Company for two years and makes $ 140,000 a year. Steve, an A+ student in college and a highly productive worker at his firm, has been employed at the Blue Sky Factory also for two years and makes $ 40,000 a year. What most likely accounts for the difference in their salaries? Fully explain your answer.

B. A decrease in the price of "Capital Good A" led Harry to lose his job at the Lemon Tree Factory; however, a decrease in the price of "Capital Good Z"caused the Lime Tree Factory to hire Susan. Explain the reason in each case.

C. In addition to population growth, name and explain two factors that can affect the SUPPLY of labor.

As the owner of a new supermarket in Virginia Beach, describe two distinct ways you would differentiate your supermarket from your competition

Explain why a large university in a small college town might be considered close to a monopsony in the labor market.

When you graduate from college, do you want demand for your labor services to be elastic or inelastic?Explain your answer.

"All prices for goods would be permanently cheaper if all advertising could be banned from our society." Do you agree?Explain fully your answer.

Fill in the blank

The main goal in product differentiation is to avoid having to compete on the basis of which variable? ___________________________

If two resources are _____________________s, a decrease in the price of Resource "A" can lead to a decline in the demand for resource "B."

Demand for resources to produce the good will be ________________tic If demand for the final good is elastic.

Study the table and answer the questions which follow.

Assume the firm sells its product in a purely competitive market and is hiring

workers in a purely competitive market.

Units of a Resource/Number of Workers	Total product (output)	Marginal product	Product price	Total Revenue	(MRP)
0	0	xxxx	$5	$0	xxxxx
1	12	12	$5	$60	$
2	22	10	$5	$110	$
3	30	8	$5	$150	$
4	36	6	$5	$180	$
5	40	4	$5	$200	$
6	42	2	$5	$210	$

A. If the cost of each additional worker is $25, how many workers should the firm hire?

Number of workers = ________________

Explain why you chose this number of workers (Or what rule are you following to determine how many workers to hire?) ____________________________

B. If the cost of each additional worker is now $45, how many workers can the firm hire?

Number of workers = ________________.

Explain why your answer changed from the first answer______________________________

MULTIPLE CHOICE. Select the one best answer to the following .

1. Which is TRUE about an oligopoly?

A. Oligopolies are usually considered very efficient in resource use.

B. Oligopolies are fairly common in the real world.

C. Economies of scale are non-existent in oligopolies.

D. Oligopolies have no incentive to invest money in new technology.

E. All of the above

2. The demand for a worker would likely increase if there were

A. An increase in the price of the good the worker is producing

B. A decline in the worker's level of productivity

C. Sales taxes and more regulations imposed on the good the worker is producing

D. All of the above.

3. As labor costs become more and more of the total cost of a good, we would expect the demand for labor to become

A. More elastic C. More inelastic

B. Unitary D.Neither more elastic nor more inelastic

4. For a firm with no influence over the labor market wage rate, e.g., one restaurant in a large city hiring workers, the wage rate it must pay to attract workers will be

A.More than its MRC C. Equal to its MRC

B.Less than its MRC D. No "D" answer to this question.

5. Which of the following is true about monopolistic (differentiated) competition (MC) when compared to pure competition (PC)?

A. Prices to buyers will be much lower in MC than in PC.

B. Production costs will be much lower in MC than in PC.

C. There is more incentive to invest in product improvement in MC than in PC.

D. Advertising will be used less in MC than in PC.

E. All of the above are true.

6.____________________________ is usually given as the main reason for the decline

in the percentage of the private labor force in a union today.

A. More regulation on unions C.Too many strikes by unions

B. Changing population demographics D. Relatively fewer factory workers

7. Historically, there has usually been a strong, long-term positive correlation between labor productivity and

A. Workers' real wages C. Inflation

B. Government regulation D.Foreign trade balance

8. The demand curve for labor for a monopoly firm or an oligopoly firm will be... compared to the demand curve for labor for a firm in pure competition.

A. More elastic

B.Neither more elastic nor more inelastic

C. More inelastic

D. The wait time for D answer is approximately 4 hours.

9. Price leadership tactics are found primarily in which industry model?

A. Monopoly C.Monopolistic/differentiated competition

B. Oligopoly D.Pure competition

10. The demand curve for a firm in monopolistic (differentiated) competition will be

A. Perfectly inelastic C. Highly but not perfectly elastic

B. Perfectly elastic D. Highly but not perfectly inelastic

11. Three auto repair shops in a small remote town would likely fit into which

Industry model?

A. Pure competition C.Oligopoly

B. Monopolistic competition D. Monopoly

12. A monopsony in the labor market will hire _____________ workers and pay them a ____________ wage than if the firm had no market power in the labor market.

A. More...lower C. Fewer...higher

B. Fewer...lower D. More...higher

13. MRC for a monopsonist will be__________ its wage rate (The firm's supply curve for labor).

A. Less than C. No different from

B. More than D. D answer on back order

14. Marginal revenue product can increase

A. When the price of the final good it helps to produce increases

B. When the resource used to produce the good has a productivity increase

C. Both of the above (A & B) will cause marginal revenue product to increase

D. Neither of the above will have any effect on marginal revenue product

15. Compared to the short-run, demand for a resource will

A. Become more elastic in the long run

B. Become less elastic in the long run

C. Become neither more or less elastic in the long run.

D. Become more elastic at first but then more inelastic later.

1. Study the two tables below and then answer the question that follows.

MRS. CARTER'S APPLE ORCHARD

NUMBER OF WORKERS	TOTAL OUTPUT(BUSHELS)	MARGINAL OUTPUT (BUSHELS)
0	0	XXXXX
1	20	20
2	35	15
3	45	10
4	50	5
5	52	2

MRS. GILBERT'S PEACH ORCHARD

NUMBER OF WORKERS	TOTAL OUTPUT (BUSHELS)	MARGINAL OUTPUT (BUSHELS)
0	0	XXXXX
1	50	50
2	90	40
3	120	30
4	145	25
5	167	22

Both Mrs. Gilbert and Mrs. Carter are out to maximize their profits.

Today Mrs. Gilbert laid off all but her first two workers, but Mrs. Carter continues to employ all of her workers.

explain why Mrs. Gilbert laid off all but two of her workers while Mrs. Carter continues to employ all of her workers.