Understanding Monopoly in the Restaurant Business
Is Amanda's Restaurant a Monopoly?
Explanation: What is a monopoly?
Definition: A monopoly is a business that is the only one selling a unique product in the market. Underline a UNIQUE PRODUCT which means it is a product that cannot be easily substituted by another product in that market.
Usually Monopoly businesses hold much high confidential information about the business that is not easily accessible to other businesses such as government license. The products sold by the other restaurants next to her are a good substitute for hamburgers. If supposedly Amanda were to raise the hamburger price, it would be easy for people to leave her hamburgers and go for pizza or tacos from the other restaurants.
Suppose Amanda owns the only restaurant in town that serves hamburgers. Other restaurants serve tacos, fried chicken, and pizza. Suppose that in the long run, Amanda's restaurant continues to be the only one in town selling hamburgers. If Amanda is breaking even, then, under the broad definition, is Amanda's restaurant a monopoly?
No, Amanda's restaurant is not a monopoly. Explanation: What is a monopoly? Definition: a monopoly is a business that is the only one selling a unique product in the market. Underline a UNIQUE PRODUCT which means it is a product that cannot be easily substituted by another product in that market. Usually Monopoly businesses hold much high confidential information about the business that is not easily accessible to other businesses such as government license. The products sold by the other restaurants next to her are a good substitute for hamburgers. If supposedly Amanda were to raise the hamburger price, it would be easy for people to leave her hamburgers and go for pizza or tacos from the other restaurants.