1. What conditions must hold for a monopoly to exist? 2. Suppose that the local government…

1. What conditions must hold for a monopoly to exist?

2. Suppose that the local government determines that the price of food is too high and imposes a ceiling on the market price of food that is below the equilibrium price in that locality. Predict some of the consequences of this ceiling.

3. The minimum wage is typically set above the market-clearing wage in the market for labor. Using a graph with an upward-sloping supply of labor, a downward-sloping demand for labor, with the quantity of labor measured on the horizontal axis and the wage rate measured on the vertical axis, show the effect on the labor market of a minimum wage set above the equilibrium wage rate.

 

 

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