Lesson Plan

• Describe the characteristics of a monopsony labour market and how it differs from a competitive market.
• Derive the marginal factor cost (MFC) curve and explain why it lies above the labour‑supply curve.
• Apply the condition MFC = MRPL to determine the monopsonist’s optimal employment and wage.
• Analyse the welfare losses created by monopsony and evaluate two government interventions that can mitigate them.
• Interpret graphical representations of monopsony outcomes and compare them with competitive equilibrium.

• Projector and screen
• PowerPoint slides with diagrams
• Printed worksheet containing derivation and graphing tasks
• Graph paper and coloured markers
• Calculators
• Exit‑ticket slips

Begin with a quick poll: “Which large retailer or platform do you think has the most power over its workers?” Use the responses to link students’ prior knowledge of competitive wage setting and state that today they will uncover why a single dominant buyer can push wages down. Success will be measured by their ability to model the market, derive MFC, and critique policy solutions.

1. Do‑now (5’) – short quiz on competitive labour‑market equilibrium (w = MRPL).
2. Mini‑lecture (10’) – introduce monopsony, show upward‑sloping labour supply and derive MFC.
3. Paired derivation activity (15’) – students use the worksheet to calculate MFC from w(L)L and compare with supply curve.
4. Graphing exercise (10’) – plot S(w), MFC, and MRPL; identify monopsony equilibrium (Lₘ, wₘ) and competitive equilibrium (L*, w*).
5. Policy stations (10’) – groups rotate through cards on minimum wage, unions, subsidies, and competition; each group records expected effects on wages and employment.
6. Check for understanding (5’) – whole‑class “thumbs” poll on the profit‑maximising condition and welfare loss.
7. Exit ticket (5’) – write one sentence summarising how a binding minimum wage can eliminate dead‑weight loss in a monopsony.

Summarise the key steps: monopsony’s upward‑sloping supply, MFC above supply, and the resulting lower wage and employment. Collect exit tickets to gauge retrieval and assign the practice question set (calculating Lₘ, wₘ, L*, w* and analysing a $15 minimum wage) as homework.