A national fast food restaurant chain has recently made the decision that their breakfast menu will now be available all day long. The product management team overseeing the breakfast lines including biscuit sandwiches, pancakes, muffins, and sausage is ecstatic over the decision. However, the product management team for the more traditional lunch and dinner menu is not so happy.

Requirements:

a. Utilizing the concept of opportunity costs, why would the latter product management team be less than receptive to the all-day breakfast menu?

b. Using only an illustrative graph with no numbers, demonstrate how the decision to offer an all-day breakfast menu would affect the location of the restaurant on the Production Possibility Frontier (PPF). Assume in both cases that the restaurant is efficient today and would remain so after the all-day breakfast menu was introduced.

Answer rating: 100% (QA)

a Opportunity cost is the cost of forgone alternative When the ... View the full answer