Be sure to explain what you are doing and show your work in the numerical problems, and provide a brief but complete answer to the discussion questions. Each part of a problem is weighted equally. Be sure to express the appropriate units for your answers. You should draw graphs for each problem to help guide your analysis.
1. Show, both graphically and algebraically, why the short-run factor demand for a monopolist is less than that for a perfectly competitive firm.
2. Is the long-run demand for a factor more, or less, elastic than its short-run demand? Explain why, and illustrate graphically.