Question

Explain how the decision to open up a restaurant after a shutdown due to the current...

Explain how the decision to open up a restaurant after a shutdown due to the current pandemic is a balancing act between marginal benefits and marginal cost. Explain what the marginal benefits and marginal costs are for opening up and why a restaurant owner might decide not to open up even if the government permits them to do so.

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Answer #1

it can be mentioned that the restaurant owner might not be willing to open the restaurant if he is not able to cover the variable costs at least and in this regard if is the price of the meals is constant, then for him if the marginal cost of providing meal is is greater than that of marginal revenue, signs that he will not be able to recover atleast the cost incurred to prepare the meal which is indeed a loss as a result of which under this condition he will not be willing to open the restaurant on the whole

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