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September 1, 2015

Homework Help: college

Posted by Kelly on Saturday, July 24, 2010 at 9:31pm.

QuadPlex Cinema is the only movie theater in Idaho Falls. The nearest rival movie theater, the Cedar Bluff Twin, is 35 miles away in Pocatello. Thus QuadPlex Cinema possesses a degree of market power. Despite having market power, PuadPlex Cinema is currently suffereing losses. In a conversation with the owners, the manager of the movie theater made the following suggestions: "Since QuadPlex is a local monopoly, we should jsut increase ticket prices until we make enough profit." Comment on this strategy. How might the market power of QuadPlex Cinema be measured? Also, recommend, the options that QuadPlex consider in the long run. Fully explain your answer in terms of market power.

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