Suppose you manage a firm, which is a monopsony in the labor market and a monopoly in the product market. Suppose another firm moves into your market, hiring from the same pool of workers and selling an identical product to the same set of customers. Use the model of 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).
Show graphically and explain your reasoning in detail. For example, if wages change, how and why do they change the way you say? Complete the following:
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