a. A trendy French restaurant is one of the first businesses to open in a small...

a. A trendy French restaurant is one of the first businesses to open in a small corner of a commercial building still under construction. The restaurant has received rave reviews and has lines of diners waiting for tables most nights. i. In the short run (next few months), what measures should the restaurant take to maximize its profit? Explain. ii. In the long run (next six months and beyond), how can it maximize its profit? (Assume that the impressive state of demand is permanent.)

b. Comment on the following statement: “Average cost includes both fixed and variable costs, whereas marginal cost only includes variable costs. Therefore, marginal cost is never greater than average cost.”

c. “If it were not for the law of diminishing returns, a firm’s average cost and average variable cost would not increase in the short run.” Do you agree with this statement? Explain.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose the number of French fries in a small bag at a particular fast-food restaurant follows...

Suppose the number of French fries in a small bag at a particular fast-food restaurant follows a normal model with mean 49 fries and standard deviation 5 fries. 1. Estimate the proportion of the bags that contain at least 40 fries. 2. Estimate the proportion of the bags that contain 50 or fewer fries. 3. The restaurant could advertise that 99% of its bags contain at least how many fries? 4. If the restaurant wants to increase the probability in...

Bridget LogueLogue is getting ready to open a small restaurant. She is on a tight budget...

Bridget LogueLogue is getting ready to open a small restaurant. She is on a tight budget and must choose between the following? long-distance phone? plans: Plan? A: Pay 8 cents per minute of? long-distance calling. Plan? B: Pay a fixed monthly fee of $18 for up to 340 ?long-distance minutes and 6 cents per minute thereafter? (if she uses fewer than 340 minutes in any? month, she still pays $18 for the? month). Plan? C: Pay a fixed monthly fee...

One of the support programs of the Government of Canada for small businesses is Canada Small...

One of the support programs of the Government of Canada for small businesses is Canada Small Business Financing Program (CSBFP). Under the CSBFP, the Government of Canada shares the risk of default with the lender by guaranteeing 85 percent of the lender’s net eligible losses. Under this program, small businesses may obtain financing for the following assets: real property (immovables), equipment, and leasehold improvements. A fourth-year finance student at Ryerson is interested in seeing whether this program contributes to the...

1. David is an experienced restaurant manager who wants to open his own restaurant (at one...

1. David is an experienced restaurant manager who wants to open his own restaurant (at one location only) and be the manager of it. He knows that he needs at least $100,000 to create and operate the business, and he knows that he can only raise $50,000 on his own towards the $100,000 he needs. Name for him all of the types of business organizations that exist (all of them). Tell him which two of those business organizations would likely...

I recently bought a restaurant in Chicago. It is pretty small, but well-located. We are open every day,...

I recently bought a restaurant in Chicago. It is pretty small, but well-located. We are open every day, but Mondays, from 4 PM until 11 PM. Our menu is basically Italian. We offer individual pizzas, pastas, salads, and a special of the day. We also have really good desserts. We offer cookies, ice cream and superb cakes. Last month we had 800 customers. Our salads are considered a whole meal, so people don’t usually order another entrée with them. Last month, we sold 400 pizzas, 200 pasta...

The coronavirus is hitting businesses and their employees. Some businesses are still open and millions of...

The coronavirus is hitting businesses and their employees. Some businesses are still open and millions of employees are working to serve customers. Some of the employees work in their workplaces while some others work from home. Almost all employees worry whether they will lose their jobs or if they will have a pay cut. It is obvious that unemployment will rise because millions of employees will lose their jobs and the remaining employees may have a pay cut (10, 20,...

The coronavirus is hitting businesses and their employees. Some businesses are still open and millions of...

According to Small Business Administration research, only half of new businesses survive for the first five...

According to Small Business Administration research, only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years. According to Kamo (2016), "Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure" (para. 14). For this week’s discussion, search...

.1) Let’s assume that you want to open one of the following new businesses. What form...

.1) Let’s assume that you want to open one of the following new businesses. What form of business ownership would you choose for each? Justify your answer and explain why you’ve chosen the particular business ownership form for each business below: a) A Specialty coffee truck. b) A planning service for business events such as the release of new products or employee gatherings. c) A Marketing consulting firm. d) Online service that aggregates and compares the price of grocery items...

A restaurant must determine whether to stay open an additional hour at night. The restaurant will...

A restaurant must determine whether to stay open an additional hour at night. The restaurant will earn $250 in revenue by staying open the extra hour. The accountant figures that the per hour costs of the restaurant are labor ($50), cost of food used ($120), electricity ($150), and building lease ($45). Assume the building lease cost per hour is calculated by taking the monthly lease cost and dividing by the number of hours in a month. The accountant further estimates...

Subjects