Question

Luke's Express Diner is the only place that sells burgers in a remote town in Arizona. As one of the​ long-time residents of the​town, Bertha Hayes contends that the burgers at​ Luke's are priced a bit too high. She claims that this is because the diner enjoys monopoly power in the town. Her​ neighbor, Ruth​ Ernes, disagrees that the diner is in a position to​ over-price products due to monopoly power because she herself knows a lot of people who​ don't like the food there.
Which of the following if true will weaken berthas argument?

a. The local government issues a limited number of restuarant licenses every year
b. the diner is highly rated by food critics and is a very popular eating place in the town
c. lukes express diner cut prices when the nearby coffeeshop cut prices on its sandwiches
d. monopolies in the area have damaged economic efficiency
e. lukes express diner recently increased the price of a burger due to an increase in meat prices, but burger sales remianed unchanged

Answer 1

Answer:

The local government issues a limited number of restaurant licenses every year. (A)

Explanation:

Bertha claims that the burgers sold by Luke's Express Diner are priced a bit too high, because they enjoy monopoly power in the town; hence with the local government issuance of a limited number of restaurant licenses every year, this will break the monopoly that Luke's Express Dinner enjoy, thus weakening Bertha's arguments.