Answered: The restaurant industry is highly…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The restaurant industry is highly competitive. The pandemic has likely reduced the demand for restaurant meals. It has also likely raised the fixed costs of a typical restaurant (because owners have needed to reconfigure seating and install new ventilation systems).

a)What will these two developments do to the equilibrium price and quantity in the market for restaurant meals?

b)What will these two developments do to the number of meals produced and the profits of a typical restaurant in the short run?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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