Thinking like an economist is first defining what "is," what a market currently looks like, and then figuring out what might happen if/when something changes. The tools in this class (supply and demand graphs, etc.) give some formal structure to thinking through "Well... what would happen? What would happen first? What would happen second?" This is an opportunity to show what you know! Suppose you manage a fish cannery in northern Alaska, which is the single largest employer in town (a monopsony in the labor market) and the only place to get those tasty, tasty canned fishes (a monopoly in the product market). Suppose another cannery moves into your market, hiring from the same pool of workers and selling an identical product to the same set of customers. Use the models of monopoly and monopsony to analyze the impact of the new firm on the quantity of output you produce (Q), the price your firm should charge (P), the quantity of workers you employ (L), and the wage you pay (W).
a) Graph
b) Written Response