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Economics for Managers | Assignment

   

Added on  2020-12-29

13 Pages4001 Words86 Views
Political Science
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ECONOMICS FOR MANGERS
Economics for Managers | Assignment_1

Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION (1)................................................................................................................................1Impact of price rise on overall demand and supply of a popular restaurant and decrease inprices of a not so popular food chain. ........................................................................................1QUESTION (2)................................................................................................................................3a) Impact on overall profit if a seller in a perfect competitive market restricts the quantity itsold in the short run.....................................................................................................................3b) The popular and less popular restaurants in the perfect competition market.........................4QUESTION (3)................................................................................................................................6Potential gains and losses to profit if the seller chooses to restrict the quantity supplied underthe ‘value from exclusivity’........................................................................................................6QUESTION (4)................................................................................................................................7Business can profit by restricting the quantity it sells, while practising price discriminationwith a subset of consumers.........................................................................................................7QUESTION (5)................................................................................................................................9Law of demand............................................................................................................................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
Economics for Managers | Assignment_2

INTRODUCTIONThe report is about a popular seafood restaurant in California which emphasizes on thefact the people who visits first will be given priority and no reservation will be taken. Therestaurant faces tough competition from others serving the same food and tastes to consumers. Itrequires managers intervention so as to design policies and procedures which will enablerestaurants to make profits by taking corrective measures. Price and demand of a commodity areinterrelated. And thus when prices increases demands decreases and vice versa. The presentreport will show the reasons behind popular restaurants, theatre owners as well as sporting eventsneeds to raise prices of their commodity if demand increases. QUESTION (1)Impact of price rise on overall demand and supply of a popular restaurant and decrease in pricesof a not so popular food chain. It has been assumed that rise in prices will decrease the demand of products in acompetitive market (Ozga, 2017). The author believes that loyal customers of the popularrestaurant will discontinue to visit the restaurant if prices are raised. Thus, a slightest increase infood prices will decrease the overall demand of the restaurant which will impact its profitmargins significantly (Pfeffer and Carney, 2017). The various factors which influences demandof an individual are -:Price of the particular commodityIncome of the consumer (Olivetti and Petrongolo, 2017)Tastes, preferences and habitsPrice of related productSatisfaction or utility derived from the product.Though in general terms the popular restaurant needs to raise its prices as it has a competitiveadvantage over the other restaurant in terms of price, tastes and preferences which consumerposses (Pfeffer and Carney, 2017). The popular restaurant has a comparative edge in increasingprices which will help in maximizing profits and reducing queue outside the restaurant. Visitingrestaurants is a social activity which people undertakes even at a high price in order to meet andgreet family and friends thereby consuming food and receiving services. Another reason to raiseprices by the popular restaurant is to enhance its expansion by the extra profit earned as well asto meet the growing demand for competition (Olivetti and Petrongolo, 2017). Another aspect1
Economics for Managers | Assignment_3

which should be focus upon is to meet the growing labour costs which emphasis restaurants toincrease food prices.Similarly the other restaurant which mostly faces empty seats needs to reduce its pricesso as to attract consumers to enhance its profitability and generate revenue to meet expenses(Pfeffer and Carney, 2017). The other restaurant needs to adopt a strategic formulation ofbusiness policies in order to run efficiently in the competitive market. In order to enhancedemand for the less popular restaurant the owner needs to present itself as food operator in sucha way which enhances consumers to visit and make a remarkable experience with reasonable tolow prices. Visiting restaurants is a social behaviour which at times gives preferences to prices ortastes and preferences depending upon the consumers and their spending power (Olivetti andPetrongolo, 2017).The graph depicts the demand and supply curve of popular restaurant which depicts that a rise inprices and quantity shifts the demand curve to the right D2 (Olivetti and Petrongolo, 2017). Theabove graph shows the shift of demand curve to the right as price increases from $1.20 to $ 1.60and supply remains the same implying the demand to shift with the quantity increment (Pfeffer2Illustration 1: Demand and Supply Curve
Economics for Managers | Assignment_4

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