The students in UNNC usually choose campus canteen to have a meal rather than go out. This phenomenon is caused by the location of the UNNC. UNNC stands in the Higher Education Park in Ningbo, which takes about 40 minutes to go to the downtown by bus. Thus this situation limits the students’ choices to choose the place to have a meal. Additionally, canteen is the only place that is able to accommodate thousands of students to have meals at the same time. While the students in UNNC usually have to spend a meal on ¥7, ¥9 or even more than ¥12, which is much higher than the other universities in the Zhejiang province. The main reason to cause this difference is that there is no competition in UNNC’s canteens, since all the 3 canteens are occupied by the same company called Hao Wei Da. Therefore, Hao Wei Da is considered as the monopoly of the UNNC. This report is aiming to analysis the reasons why a monopoly can charge a much higher price for its products. The first part is going to introduce the theory of monopoly, and another part is aiming to apply the theory in the canteen case. In the end the report will give two suggestions to reduce the power of Hao Wei Da in UNNC.
Monopoly is a kind of basic market structures, which used to describe a firm that is the single producer of a product in a certain market and there are no close substitutes (Mankiw, 2007). The aim of a monopoly firm is simple which is just to maximize its profit. In a general market, the companies should decide how much to produce and what the price provided by the other competitors. While, there are no competitors in the monopoly market, the monopoly firm is able to vary the price of its goods by adjusting the quantity produced. But how does the monopoly calculate how much quantity to produce can maximize its profit? In order to find it out, the economists introduce three curves to solve this problem, which are showing in the Figure 1. The first curve is Demand Curve, which depicts the... [continues]
Monopoly is a kind of basic market structures, which used to describe a firm that is the single producer of a product in a certain market and there are no close substitutes (Mankiw, 2007). The aim of a monopoly firm is simple which is just to maximize its profit. In a general market, the companies should decide how much to produce and what the price provided by the other competitors. While, there are no competitors in the monopoly market, the monopoly firm is able to vary the price of its goods by adjusting the quantity produced. But how does the monopoly calculate how much quantity to produce can maximize its profit? In order to find it out, the economists introduce three curves to solve this problem, which are showing in the Figure 1. The first curve is Demand Curve, which depicts the... [continues]
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