NAGARJUNA RESTAURANT

Five economic concepts:

 1) MONOPOLISTIC COMPETITION:

 

 There are many number of restaurants in the market. The freedom of entry of new restaurant in the market is not restricted. The nature of product(food items) is differentiated.

2) DIMINISHING MARGINAL UTILITY:

 Diminishing marginal utility applies on unlimited meals where this nagarjuna restaurant offers unlimited food with particular time period. Hence every additional food item we consume the utility or the satisfaction decreases.

 3) REVENUE, PRICE AND ELASTICITY:

Here the food item(good) is elastic so to increase the revenue , the price of the food item of nagarjuna restaurant should be reduced.

4)  DETERMINANT OF INCOME ELASTICITY:

When a income of consumers increases even the purchases increases. So depending upon the income of consumers they choose certain restaurant.

 5) ECONOMIES OF SCALE:

It means 1% drop in average cost of production follows a 1% increase in output. So when the average cost of the product decreases then we can see increase in output.