Use the following to answer question(s): The Restaurant Model

-(Exhibit: The Restaurant Market) The exhibit shows curves facing a typical restaurant in a community.Assume that the market is characterized by many firms, differentiated products, easy entry and easy exit.The restaurant shown here will maximize profits at a quantity of:
A) Q₁.
B) Q₂.
C) Q₃.
D) There is not enough information given to answer the question.

Question

Use the following to answer question(s): The Restaurant Model
 
-(Exhibit: The Restaurant Market) The exhibit shows curves facing a typical restaurant in a community.Assume that the market is characterized by many firms, differentiated products, easy entry and easy exit.The restaurant shown here will maximize profits at a quantity of:
A) Q₁. 
B) Q₂. 
C) Q₃. 
D) There is not enough information given to answer the question.

Quizplus · Accepted Answer

The restaurant will maximize profits at the quantity of Q2, where marginal revenue equals marginal cost. This is the point where the demand and cost curves intersect. At this point, the restaurant will be able to sell the optimal amount of food at the highest possible price, resulting in maximum profit.

Use the Following to Answer Question(s): the Restaurant Model