Question

Explain why this is false: There are very large numbers of restaurants in major cities such...

Explain why this is false: There are very large numbers of restaurants in major cities such as Los Angeles, and very large numbers of restaurant customers, so it is appropriate to use the supply and demand model to analyze the restaurant market in this sort of city.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A supply and demand model is applicable to a perfectly competitive market where each sellers is too small to influence market price and sells identical goods or services. Sellers have no pricing power and are price takers. However, even though there are many restaurants in the city, many of them offer slightly differentiated products, either in terms of menu, quality or service, therefore it is a monopolistically competitive market. Sellers have pricing power and face a downward sloping demand curve, rendering a demand-supply analysis inapplicable.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will...
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will be appreciated wherever possible or necessary. While in the classical model with flexible wages and prices both output and employment are determined in the goods market by the demand for and supply of goods, in Keynes’ model with fixed money wages they are not. In Keynes’ model the important role of the interest rate is to bring the real demand in line with supply...
Decide if each statement is true or false, why? 1.In North America, there has been a...
Decide if each statement is true or false, why? 1.In North America, there has been a major trend in the decentralization (i.e., suburbanization) of cities over the past century. True or False: This trend is attributable solely to the invention of (and now widespread use of) automobiles. 2.Suppose that as a result of climate change, the productivity of agricultural land declines. This causes agricultural land rent in the area surrounding a city to decline. True or False: If this happens,...
For the scenarios discussed below, use supply and demand curves and a graph to analyze what...
For the scenarios discussed below, use supply and demand curves and a graph to analyze what will happen to both price and quantity in equilibrium given the information available below. Graphs MUST be half a page each. When it is impossible to pin down the direction of the effect, discuss what is more likely in your opinion and why. Make sure to differentiate between movements of curves and movements on curves. For example, you could say something like this: “the...
True or False and explain why or how. Draw graphs as appropriate. a) Pell Grants are...
True or False and explain why or how. Draw graphs as appropriate. a) Pell Grants are grants that Federal government gives out so that low income students can afford college. These grants are useful according to the human capital model as well as the signaling model. b) Both signaling and human capital models can explain racial disparities in education levels.
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will...
Explain very briefly if the following statements are true or false. Mathematical or graphic treatment will be appreciated wherever possible or necessary. 5. In Keynes’ model the labor market clears at such a real wage rate at which both households and firms maximize their utility and profit respectively. 6. In the classical model, the quantity theory of money holds at all times postulating that real money balances are demanded in proportion to real income. Therefore, we can express this as...
Explain why each of the following statements is True, False, or Uncertain according to economic principles....
Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. A5-7. An economy with only price taking firms will have a horizontal short-run aggregate supply curve. A5-8. A given increase in aggregate demand has a larger effect on national income the less steeply do unit costs rise with increases in production.
Determine whether each of the following statements is true or false and explain why you think...
Determine whether each of the following statements is true or false and explain why you think so. a) In perfectly competitive market, the long-run supply curve is downward sloping in decreasing cost industry. b) The marginal revenue for a perfectly competitive firm is equal to the market price. The marginal revenue for a monopolist is greater than the market price for positive quantities of output. c) To calculate the Lerner Index for a particular firm, you need to know price...
1. Determine whether each of the following statements is true or false and explain why you...
1. Determine whether each of the following statements is true or false and explain why you think so. a) In perfectly competitive market, the long-run supply curve is downward sloping in decreasing cost industry. b) The marginal revenue for a perfectly competitive firm is equal to the market price. The marginal revenue for a monopolist is greater than the market price for positive quantities of output. c) To calculate the Lerner Index for a particular firm, you need to know...
Briefly explain why you think the following statements are true, false, or uncertain. Your grade will...
Briefly explain why you think the following statements are true, false, or uncertain. Your grade will depend largely on the quality of your explanations. In the very short run price is absolutely fixed. Firms in long‑run equilibrium in a perfectly competitive industry will produce at the low points of their average variable cost curves because firms maximize profits and free entry implies that maximum profits will be zero. If a 1 percent increase in price leads to a 0.7 percent...
1) "President Reagan proposed a lowering of the minimum wage for teenagers during the summer." Assume...
1) "President Reagan proposed a lowering of the minimum wage for teenagers during the summer." Assume that there are normal demand and supply curves in the market for labor for both teenagers and adults and that the new, lower minimum wage is an effective one (below the old minimum wage, but still above what the equilibrium wage would be). What would be the effects of Reagan’s proposal on the market for teenage labor? During the summer months, what would be...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT