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THE CASE:

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.

Requirement: 

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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Replies to This Discussion

Kindly share your ideas ASAP,don't wait for the due date yar.

Q 1st Part: explain that in which category of market structure restaurants fall

Q 2nd Part: market demand curve for restaurants to be more or less elastic in the long run after competitor’s entry has eliminated economic profits

market demand curve for restaurants to be more or less elastic in the long run after competitor’s entry has eliminated economic profits
i think market demand curve for restaurants to be more elastic in the long run after the competitor’s entry has eliminated economic profits

MARKET STRUCTURE describes the competitive environment in the market for any good or
service. Market structure refers to the competitive environment in which the buyers and sellers of the product operate. Market structure is typically characterized on the basis of four important industry characteristics:
1. The number and size distribution of active buyers and sellers and potential entrants,
2. The degree of product differentiation,
3. The amount and cost of information about product price and quality,
4. Conditions of entry and exit.
Effects of market structure are measured in terms of the prices paid by consumers, availability and quality of output. In general, the greater the number of market participants, the more vigorous is price and product quality competition. The more even the balance of power between sellers and buyers. As a result, the more likely it is that the competitive process will yield maximum benefits.

MARKET STRUCTURE AND DEGREE OF COMPETITION
Market structure refers to the competitive environment in which the buyers and sellers of the product operate. Four types of market structure are usually identified. These are perfect competition at one extreme, pure monopoly at the opposite extreme, and monopolistic competition and oligopoly in between.


PERFECT COMPETITION (NO MARKET POWER)
Many buyers and sellers
Buyers and sellers are price takers
Product is homogeneous
Very easy market entry and exit
Non price competition not possible
Perfect mobility of resources
Economic agents have perfect knowledge
Examples: Stock Market, agricultural products, financial instruments, precious metals,
petroleum products, prominent markets for intermediate goods and services, e.g., discount
retailing, unskilled labor market.

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
Examples: Fast-food outlets, boutiques, restaurants

ECO404 - Managerial Economics GDB No. 2 Solution Fall 2015 Due Date January 26, 2016

ECO404 - Managerial Economics GDB No. 2 Solution Fall 2015 Due Date January 26, 2016

Total Marks 5
Starting Date Friday, January 22, 2016
Closing Date Tuesday, January 26, 2016
Status Open
Question Title Market Structures
Question Description
THE CASE:

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.

Requirement:

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?

Please Discuss here about this GDB.Thanks

Our main purpose here discussion not just Solution

We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions.

please discuss some other points here.

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

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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