1. Evaluate the following quote from USA Today, March 22, 1988:

"Raising the minimum wage wouldn't result in fewer jobs because businesses would absorb the costs as they have absorbed other costs, according to Robert McGlotten, director of legislation for the AFL-CIO."

'Business doesn't hire people on the basis of wage,' he says, 'but on the basis of need.'

'If an individual with a particular kind of occupation is needed, then that occupation and the skill levels of the individuals would be matched with a wage rate,' he says.

And the lost-job claim? McGlotten says critics made that argument when the minimum wage was 25 cents an hour. And 'that's never been true at all.'"

2. Give brief answers to each of the following:

(a) "Since a monopolist is the only supplier of a well-defined product, there is no limit to the price it may charge." Is this statement true or false?

(b) Explain why a monopolist will never set a price (and produce the corresponding output) at which the demand is price-inelastic.

(c) "The ultimate monopoly product would be one whose cross elasticity of demand, with respect to any and all other products, was zero." Comment.

(d) "The reason movie theaters charge youngsters and oldsters less than the rest of us is because theater owners want to help these two low-income groups."