You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants
Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run?
A) If your success continues, you will be likely to establish a franchise and expand your market size.
B) Your competitors are likely to change their menus to make their products more similar to yours.
C) If you continue to maintain consistent quality, you will be able to earn profits indefinitely.
D) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero.
D
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The marginal propensity to consume can best be described as:
A) consumption/income B) the impact of a change in income on GDP C) the change in income divided by the change in consumption D) the change in consumption divided by the change in income
A utility-maximizing consumer would not consume more of a good if
a. marginal utility increases as more is consumed b. total utility diminishes as more is consumed c. MU/P < 1 d. MU/P < 1 e. MU/P = 1