When the price elasticity of demand is small in magnitude, a _____ increase in the price leads to a _____ reduction in the amount purchased and the demand curve is relatively ____.

Firms in monopolistically competitive markets spend significant sums on product differentiation because:

a. it enables them to earn positive profits in the short run. b. it increases the elasticity of demand for a firm's product. c. it reduces the number of competitors. d. it causes the firm's supply curve to become horizontal so the firm can expand output indefinitely. e. it causes the firm's demand curve to become horizontal so that it can charge a fixed price for its product.

Refer to the graph shown. Without government intervention, market forces would result in:

A. 500 labor hours demanded, 900 labor hours supplied, and a wage rate of $7.25 per hour. B. 500 labor hours demanded, 500 labor hours supplied, and a wage rate of $7.25 per hour. C. 800 labor hours demanded, 800 labor hours supplied, and a wage rate of $6.50 per hour. D. 1,200 labor hours demanded, 500 labor hours supplied, and a wage rate of $4.50 per hour.