Figure: The Restaurant Market (Figure: The Restaurant Market) The figure The Restaurant Market shows curves facing a typical restaurant in a community.Assume that many firms, differentiated products, and easy entry and easy exit characterize the restaurant market.If the restaurant shown here were to raise its price above the profit-maximizing price, it would experience:

Question

Figure: The Restaurant Market   (Figure: The Restaurant Market) The figure The Restaurant Market shows curves facing a typical restaurant in a community.Assume that many firms, differentiated products, and easy entry and easy exit characterize the restaurant market.If the restaurant shown here were to raise its price above the profit-maximizing price, it would experience:

Quizplus · Accepted Answer

According to the figure, the profit-maximizing price for the restaurant is where the marginal cost curve intersects the demand curve, at a price of $10. If the restaurant were to raise its price above this point, it would move along the demand curve to a point where the quantity demanded is lower, leading to a reduction in total revenue. Therefore, the correct answer is A.

Figure: the Restaurant Market (Figure: the Restaurant Market)