Decrease in demand for bridge and tunnel crossings

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Reference no: EM137766

Q. 1) Are there any firms that are really true monopolies? That is, there is absolutely no substitute for what the firm is offering? Provide an example of several firms to facilitate might come close to being a real and true monopoly? Knowing that the definition of "market power" is, do you think it's possible for a firm to be a monopoly and NOT have market power? Explain why or why not? And then, do think it's possible for a firm to NOT be a monopoly and have a LOT of market power? Why or why not?

2) a) Is MTA a monopolist in New York City? Do you think MTA possesses a high degree of market power? Why or why not?

b) If MC of letting another vehicle cross a bridge or travel through a tunnel is nearly zero, how should the MTA set tolls in order to max profit? How are these two objectives related?

c) With the decrease in demand for bridge and tunnel crossings, what is the optimal way to adjust tolls: raise tolls, lower tolls, or leave unchanged?

Reference no: EM137766

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