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7 November, 17:46

In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods and Lunardi's. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi's close at 9 pm. Which of the following statements is true?

A) Safeway is a monopoly all day because it produces a service that has no close

B) Safeway has a monopoly at midnight but not during the day.

C) Safeway can ignore the pricing decisions of the other two supermarkets.

D) Safeway probably has a higher markup to compensate for its higher cost of substitutes. production

Answers (1)
  1. 7 November, 19:41
    The correct answer is option B.


    There are three very popular supermarkets. Among them, two close at 9 p. m, while Safeway remains open 24 hours a day. Since at midnight Safeway is the only accessible supermarket and there are no close substitutes available, we can say that Safeway has a monopoly at midnight.

    Though it does not have a monopoly during the day as there are other supermarkets providing closer substitutes.
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