Final answer:
Lagatt Green needs to make an informed decision by evaluating their pricing strategy and conducting market research.
Step-by-step explanation:
In this scenario, the subject being discussed is about the pricing strategy of Lagatt Green, a monopolist in the market. The question is whether Lagatt Green should charge a higher price of $3.00 or stick with their current price of $2.75 per bottle to increase profit. According to your study partner Chris, Lagatt Green should charge the higher price of $3.00 because they have market power as a monopoly.
While it is true that monopolies have the ability to set higher prices due to their market power, it doesn't necessarily mean that charging a higher price will always result in increased profit. There are several factors that Lagatt Green needs to consider before changing their price. They should analyze the demand and elasticity of their product, competitor prices, and consumer preferences to determine the optimal price that maximizes their profit.
If Lagatt Green raises the price to $3.00, they might experience a decrease in demand and potentially lose customers to other competitors offering lower prices. On the other hand, if they stick with the current price of $2.75, they might attract more customers and potentially increase market share. It's crucial for Lagatt Green to carefully evaluate their pricing strategy and conduct market research to make an informed decision.