Grand Hotel is a neo-futurist luxury hotel in Bangladesh, it has 772 rooms include nine two-story "sky

villas," three of which have private pools. Facilities provided inside a hotel room may range from a modest-
quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a refrigerator and
other kitchen facilities, upholstered chairs, a flat screen television, and en-suite bathrooms.

Option A:
“Monopoly firms like Grand Hotel is more efficient than a small hotel”. Do you agree with this statement?
Explain.

Option B:
“Monopoly firms like Grand Hotel bring more harm than good to consumers”. Do you agree with this
statement? Explain.

(Answer keys)
Grand Hotel is a neo-futurist luxury hotel in Bangladesh, it has 772 rooms include nine two-story "sky
villas," three of which have private pools. Facilities provided inside a hotel room may range from a modest-
quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a refrigerator and
other kitchen facilities, upholstered chairs, a flat screen television, and en-suite bathrooms.

Option A:
“Monopoly firms like Grand Hotel is more efficient than a small hotel”. Do you agree with this statement?
Explain.
Paraphrasing + Definition
Monopoly firms like Grand Hotel are more efficient than small hotel as it is large enough to achieve the cost
advantage over the smaller hotel. Monopoly is a market structure where there is one producer dominating
the hotel market.

Pros (support the statement):

Grand Hotel has a total of 772 rooms, which require them to purchase a lot of food ingredients for their
restaurants. One of the cost advantages of Grand Hotel is lower average cost by achieving the economies of
scale, where it can purchase large amount of food ingredients from key food suppliers and obtain a large
trade discount. It allows Grand Hotel to efficiently lower their costs than the smaller hotels.

Cons (do not support the statement):

However, Grand Hotel may have trouble in cutting down the costs in daily operation. As there is low level
of competition in hotel market, Grand Hotel has no incentive to improve its hotel operations and may face
higher costs than necessary. For instance, it may hire excessive labour (e.g. receptionists) for certain aspect
of the operations (e.g. front desk). On the other hand, small hotel has to survive in the market by trimming
any unnecessary costs. Therefore, it is possible that the small hotel is more efficient than larger hotels like
Grand Hotel.

Option B:
“Monopoly firms like Grand Hotel bring more harm than good to consumers”. Do you agree with this
statement? Explain.

Paraphrasing + Definition
Monopoly firms like Grand Hotel can bring more harm than good to consumers as it is currently operating in
a lower competition environment. Monopoly is a market structure where there is one producer dominating
the hotel market.

Pros (support the statement):

One of the disadvantages of monopoly firms like Grand Hotel is that it may exploit the consumers by
charging a higher price for its rooms. As Grand Hotel dominates the hotel market, it can lift up the price for
its 772 rooms and earn higher profits. Consumers with no other alternative hotels have to suffer higher price,
which will hurt their welfare.

Cons (do not support the statement):

However, monopoly firms like Grand Hotel usually make large amount of profits than smaller hotels. Such
large amount of profits can be channeled into higher efficiency in different aspects of the hotel business.
With higher efficiency, the costs of operation are lowered, which allow Grand Hotel to lower the price of its
hotel rooms and benefit consumers.