Question

Assume that restaurants are in monopolistic competition in Melbourne. Looking at the cost incurred by firms operating in a monopolistic market, what is the impact of a curfew on the profit/losses made by Melbourne restaurants in the short run? What could happen in the long run? Provide a graphical representation of the equilibrium of the firm in the short run and in the long run.

Answer 1

Monopolistic firms is that firm in which there are large no of buyers and sellers of a same product but the product of the seller is different from one another

* Equilibrium in monopolistic is exist when

Demand = supply...

It can be possible that with the be price control law of demand also exist, means produces will not rise its price up to limits that consumer will shift to other and it reduces its supply.

Restaurant of Melbourne comes under Monopolistic competion in the long run .The difference between the short run and the long run in monopolistically competitive market is that in the long run new firms can enter the market, which is specially likely it firms are earning positive economic profits in the short run .In the same way curfew also effect in this way.