APEcon Homework – Wednesday, December 2, 2015 (Due 12/3)
Now read pages 331 – 337 (end at Quick Review 15.1) and answer Discussion Question #3 & #4
and Problem #2. Remember that the importance of this homework is to see how similar resource
markets are to product markets. There are perfectly competitive labor markets that function
exactly like perfectly competitive product markets and there are “monopsonistic” labor markets
that function exactly like monopolistic product markets.
3. Take the quick quiz on page 334 and check your answers.
4. What are the important differences between a perfectly competitive resource market and a
perfectly competitive product market?
5. Explain the ways that a monopsonistic labor market is similar to a monopoly’s product
market. In your answer, compare the following pairs of concepts:
Monopsonistic Labor Market
Monopolistic Firm’s Product Market
marginal resource cost
marginal revenue
wage rate
price
upward sloping supply curve
downward sloping demand curve
quantity of labor employed
level of output produced
labor market power
product market power