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Lahore is second largest city in Pakistan and often referred to as the cultural heart of Pakistan. The city is famous about variety of restaurants from local to international food. There is enormous attractive and tempting variety of restaurants in Lahore with diversified cuisine within all kinds of budgets. People from all over Pakistan and living abroad also wish to come back to Lahore and explore the new restaurants. Lahoris have a zeal and passion for food famous all over Pakistan. So keeping in view the demand side and handsome profits, restaurant business is quickly spreading in market.


Being the student of managerial economics, you are required to explain that in which category of market structure restaurants fall, also explain would you expect the market demand curve for restaurants to be more or less elastic in the long run after competitor’s entry has eliminated economic profits?

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Plz hint about the market structure of restaurants

Monopolistic Competition (market power based on Differentiated products)
Many sellers and buyers ( large no of relatively small firms acting independently)
Differentiated product
Market entry and exit relatively easy
Non price competition is very important
Perfect mobility of resources

monopolistic market structure faced by the firms in the clothing, food, hotel, retailing, and consumer products industries is called monopolistic competition.

bhai plz proper sol to btain iska... :(

What will the effect on demand curve

Kindly post the idea solution of second part.

in a monopolistic competition, the firms are able to differentiate their products, therefore, they have inelastic demand curve and so they can set the prices.

Please correct me if it is wrong for the second question;


the demand curve will be more elastic in the long run as there is possibility to find more suitable substitutes for food.


according to me its right 

Dear Students Don’t wait for solution post your problems here and discuss ... after discussion a perfect solution will come in a result. So, Start it now, replies here give your comments according to your knowledge and understandings....

kia kuren. aik economics hi to hy jo smj nahi ti.


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