Answer to Question #27405 in Economics of Enterprise for ibrahim

Question

All Open University Malaysia (OUM) Students are identical and they are all indifferent between attending the OUM and their next best alternative. Students eat are the student union.
a) If OUM rents space in the Student union to several food provider (such as Subway and MacDonald’s) who then compete with each other, how much rent can OUM collect?

b) If OUM rents all the space in the student union to a single food provider who charges monopoly prices, how much rent can OUM collect?


c) IF prospective students are aware of the dining situation on campus, how would the decision to go with a monopoly food provider affect the amount of tuition the university can collect?

d) In order to maximize its profits, should OUM rent to a monopolist or to several competitors?