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Homework answers / question archive / The Marquee Theater is the only movie theater in Whitefish, Montana
The Marquee Theater is the only movie theater in Whitefish, Montana. The nearest rival movie theater is 50 miles away in Polson. Thus, Marquee Theater possesses some degree of market power. Despite having market power, Marquee Theater is currently suffering losses. In a conversation with the owner of the Marquee, the manager of the movie theater made the following suggestion: "Since Marquee is a local monopoly, we should just increase prices until we make enough profit."
a. Comment on this strategy.
b. How might the market power of the Marquee Theatre be measured? Be specific.
c. What options should the Marquee Theatre manager consider in the long run?
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