Question

Pick a seller of your choice. State any three long-run decisions that he may take.

Answer 1

The restaurant business is a monopolistically competitive firm .The seller in the restaurant business ie anybody starting such a business will have to take many important long run decisions .The 3 such decisions are-1)the monopolistic seller decides on the profit maximizing quantity and price. A monopolistic competitor faces a downward sloping demand curve and so chooses a price quantity combination on the demand curve.2)The seller intends to increase sales through product differentiation . The seller distinguishes his product and services from others and tries to attract more customers.3)The seller will have to decide how much to produce .The seller will produce upto the point where Marginal revenue is equal to the marginal cost.