Log in
Economics
1
answer
0
watching
59
views

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.

Watch
1
answer
0
watching
59
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Chika Ilonah
Chika IlonahLv10
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

True/False (Explain) (The explanation is the most important part no credit will be given for True/False answer alone)

1)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 market for restaurants in this sort of city.

2) A particular firm has decreasing returns to scale at all levels of output. If it was divided into two smaller firms that each uses exactly half the amount of all inputs compared to the original firm, and prices remained constant, the combined profits of the two smaller firms would be greater than the profit of the original firm.

3) Competitive firms always earn zero profits because their marginal cost is equal to their marginal revenue at the optimal level of production.

4) An increase in the price of an input used by a firm leads to higher costs and lower profit at the original quantity produced; therefore, it should respond by increasing its quantity produced so that its revenue will increase.

Patricia is researching venues for a restaurant business. She is evaluating three major attributes that she considers important in her choice: taste, location, and price. The value she places on each attribute, however, differs according to what type of restaurant she is going to start. If she opens a restaurant in a suburban area of Los Angeles, then taste is the most important attribute, three times as important as location, and two times as important as price. If she opens a restaurant in the Los Angeles metropolitan area, then location becomes three times as important as taste and two times as important as price. She is considering two venues, respectively, a steak restaurant and a pizza restaurant, both of which are priced the same. She has rated each attribute on a scale of 1 to 100 for each of the two different types of restaurants.

Attribute Steak Restaurant Pizza Restaurant

Taste 80 70

Location 55 80

Price 65 50


Show all of your calculations and processes. Describe your answer for each question in complete sentences.

Which of the two options should Patricia pursue if she wants to open a restaurant in a suburban area of Los Angeles? Calculate the total expected utility from each restaurant option and compare. Graph is not required. Describe your answer, and show your calculations.

Which of the two options should she pick if she plans to open a restaurant in the Los Angeles metropolitan area? Describe your answer, and show your calculations.

Which option should she pursue if the probability of finding a restaurant venue in a suburban area can be reliably estimated as 0.7 and in a metropolitan area as 0.3? Describe your reasoning and show your calculations.

Provide a description of a scenario in which this kind of decision between two choices, based on weighing their underlying attributes, applies in the “real-world” business setting. Furthermore, what are the benefits and drawbacks, if any, to this method of decision making?

Chez Henri is a restaurant chain that operates in 40 different cities. It hired an economist to estimate the factors affecting the demand for its sales. The following equation was estimated using cross sectional data from each of its 40 restaurants.

Y Annual restaurant sales (in thousands)

X1 Disposable per capital income (in thousands) of the residents living within 5 miles of a restaurant

X2 Population (in thousands) within a 5-mile radius of a restaurant

X3 Number of competing restaurants within a 5-mile radius


The following information was obtained from the regression analysis:

Multiple R: 0.92

R-Square: 0.85

Std. Error of Est.: 0.40

Analysis of Variance

DF Sum Squares Mean Sqr. F-Stat

Regression 3 220 73.3 18.2

Residual 36 60 1.7


Variable Coefficient Std. Error T-Value

Constant 0.4 0.2 2.0

X1 0.01 0.004 2.5

X2 0.02 0.015 1.3

X3 -20.2 4.50 -4.6


Answer the following questions:

a. Give the estimated demand equation for predicting restaurant sales.

b. Provide an interpretation for each of the regression coefficients.

c. Which of the coefficients are statistically significant and which are not? Explain.

d. What percent of variation are restaurant sales explained by this equation?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in