A large city has nearly 500 restaurants, with new ones entering regularly as the population grows. The city decides to limit the number of restaurant licenses to 500. Which characteristics of this market are consistent with perfect competition and which are not? Is this restaurant market likely to be nearly perfectly competitive? Why?
Answer to relevant QuestionsWhy would high transaction costs or imperfect information tend to prevent price-taking behavior?Should a firm shut down if its revenue is R = $ 1,000 per week, a. Its variable cost is VC = $ 500, and its sunk fixed cost is F = $ 600? b. Its variable cost is VC = $ 1,001, and its sunk fixed cost F = $ 500? c. Its ...What is the effect on the short-run equilibrium of a specific subsidy of s per unit that is given to all n firms in a market?For a firm, how does the concept of producer surplus differ from that of profit if it has no fixed costs? If the inverse demand function is p = 300 – 3Q, what is the marginal revenue function? Draw the demand and marginal revenue curves. At what quantities do the demand and marginal revenue lines hit the quantity axis?
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