Question

Suppose you are tasked to open a restaurant in your hometown. Identify what type of a restaurant/and or food you would put up/serve – fast food, fast casual, fine dining, etc.

Discuss/justify your choice given the concepts covered in monopolistic competitive markets – be specific. How will you compete with already existing restaurants in your hometown? Be specific. Are you likely going to earn economic profits in the long-run? Why or why not?

Answer 1

Since all the restaurants actually come under the monopolistic competition, can we mention that I would actually offer a fast food restaurant in this is because of the fact that the fixed cost would be low and the break-even would reach soon when compared to that of other types purchase casual dining and fine dining. Apart from that the differentiation level can be more in terms of quality as well as the cuisine at a very low cost in a fast food restaurant which is actually required for the monopolistic competitive markets to survive at the price in the market and the main tool I would use is differentiation where it can be mentioned that economic profits in the long run wouldn't be earned as many new firms enter the market and the product differentiation level will go down