You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant from your competitors by offering northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant market in your hometown after you open?

Question

Quizplus · Accepted Answer

The introduction of a new restaurant with distinct offerings (northern Italian cuisine and locally grown organic produce) increases the variety of options available to consumers. This makes consumers more sensitive to price changes since they have more alternatives to choose from, hence making the demand curve facing each restaurant owner more elastic.

You Are Planning to Open a New Italian Restaurant in Your