Monopolistic Business Arena Discussion Responses

User Generated

dhraml

Economics

Description

A]

Despite the family owning the only movie theater in a 40 mile radius and the uncle being the zoning board chairperson I think it is bold to assume that no competition will ever arise or that the residents of the town will simply choose to not see a movie at the theater. The ability to "charge any price you like, and still make a profit" is only true to some extent. The prices at said movie theater still have to be reasonable, especially with the numerous streaming services available that will allow a person to purchase almost any movie with the click of a button. The theater must take into account this competition, even if it is not another physical movie theater arising in town. If the family charges outrageous prices, they will not make a profit at all. Personally, if I wanted the movie theater "experience, I would drive the 40 miles to another theater, simply not see a movie, or purchase the movie once it is available on streaming services. I do not believe a monopolist can pose any price they wish and still make a profit .

B]

A monopolist exists when they are the only source in the market for a particular good, making it so they hold all of the power. This could make you think the above statement is true, but that doesn't mean it is the smart thing to do. There are many reasons why I believe this statement is not true, but the main reason is that if you charge too much, people will stop buying. You may think you will be able to get away with high prices, if you have the only business that sells certain products around you, but consumers will find other ways to find similar products, use substitutes, or simply go without. For example, if your family owns the only movie theater in town and since your uncle is the towns chairperson, you may think no one will be aloud to compete with you and therefore you can raise your prices. This is simply not true. You could try to do this, but you will see your business fail miserably. For one, people will look for movie products else where. If you have Internet capabilities, you can download movies or apps that let you watch movies from home. If you have cable, there are certain programs that let you record and save movies. You could always order movies online or travel to the store to get some. In the case someone really wants to go see a new movie, comparing the ticket prices to gas prices, it may be cheaper to travel else where. Also, if the people in your town get angry enough, they could choose to vote against your uncle for a new competing business with competing prices. Overall, whether you have competition or not, you cannot charge however much you want, because if the consumers do not like the prices, you will not have as much business.

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Discussion Responses
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Response to Student A
Hi. This is a fantastic post. I agree with your post and your argument regarding the issue
of a monopolistic business arena. Your post offers powerful insights to explain how being the
sole provider of services and charging any price can assure the attainment of profits. According
to the post, charging reasonable prices can only enable th...

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