In which market Restaurant M falls according to its characteristics.

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Answer 1

Question

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

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a) Assume there are two firms, 1 and 2, competing as Cournot duopolists in a market, selling a homogeneous product. Demand is given by p = 36 – (q1 + q2), where p is price and q1 and q2 are the outputs of firms 1 and 2 respectively. Each firm faces a marginal cost of 6 per unit of output and no fixed cost. Find each firm’s optimal output, the price at which they sell, each firm’s profit , and consumer surplus. b) Now assume that the firms face the same costs, but horizontally differentiate their product, so that firm 1 faces demand p1 = 36 – (q1 + q2/2) and firm 2 faces demand p2 = 36 – (q1/2 + q2). Assume Cournot competition. Calculate the new equilibrium prices and outputs for each firm, consumer surplus and profits. c) Now assume that rather than facing a given degree of product differentiation, the firms can choosehowdifferentiatedtheirproductsare.Thisisequivalenttoinversedemandequationsp1 =36 –(q1 +θq2)andp2 =36–(θq1 +q2),0≤θ≤1,withθdeterminedbythefirms’choicesofproduct…

Assume there are two firms, 1 and 2, competing as Cournot duopolists in a market, selling a homogeneous product. Demand is given by p = 36 – (q1 + q2), where p is price and q1 and q2 are the outputs of firms 1 and 2 respectively. Each firm faces a marginal cost of 6 per unit of output and no fixed cost. Find each firm’s optimal output, the price at which they sell, each firm’s profit , and consumer surplus.

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Answer 2

Question

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

Answer 6

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

Answer 7

Chapter 15, Problem 1.1P

To determine

In which market Restaurant M falls according to its characteristics.

Answer 8

Expert Solution & Answer

Answer to Problem 1.1P

The restaurant is in a monopolistically competitive market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The restaurant industry is a club of many firms serving varieties of foods. Each one tries to differentiate their cuisine through their unique foods. Restaurant M is famous for their Mexican food, especially for their unique margaritas and one-of-a-kind twists. The size of the market share owned by Restaurant M is way too small compared to the total size of the market. Thus, there is no domination by the firm in the market. Along with these characteristics, it is important to note that there are no barriers to entry and exit from the restaurant industry in the economy.

Thus, there is product differentiation in the industry. Also, there is freedom of entry and exit in the market and there is a large number of firms in the market. All these characteristics indicate that Restaurant M falls under the monopolistically competitive market.

Answer 12

Economics Concept Introduction

Market: A market is a place where the buyers and sellers interact with each other and the exchange of goods and services takes place between them at a mutually agreed price level.

Monopolistic competition: The monopolistic competition is a market structure where there is a large number of buyers and sellers in the economy, and there is product differentiation in the economy as well as freedom of entry and exit into the market.

Answer 13

Ch. 15 - Prob. 1.1P Ch. 15 - Prob. 2.1P Ch. 15 - Prob. 2.2P Ch. 15 - Prob. 2.3P Ch. 15 - Prob. 2.4P Ch. 15 - Prob. 2.5P Ch. 15 - Prob. 2.6P Ch. 15 - Prob. 2.7P Ch. 15 - Prob. 2.8P Ch. 15 - Prob. 2.9P

In which market Restaurant M falls according to its characteristics.

In which market Restaurant M falls according to its characteristics.

Answer to Problem 1.1P

Explanation of Solution

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Chapter 15 Solutions