Examine perfect competition in the value-menu fast-food restaurant business. Why

Question

Examine perfect competition in the value-menu fast-food restaurant business.  

Why does this type of fast-food restaurant tend to display characteristics of perfect competition?

Why might firms in perfect competition choose to be open on Monday, typically the slowest day of the week, when their revenues do not seem to be sufficient to warrant doing so?

Under what conditions would your value-menu fast-food restaurant decide to be open on Mondays, and when would it decide not to be open on Mondays?  

When is losing money on Mondays still a good business decision?

Explain how your experience as a manager would change if the value-menu fast-food restaurant you were in charge of operated under a different market structuremonopolistic competition, oligopoly, and monopoly.  For example, in each case, how would you decide what price to charge?  

What would your profits look like?  Would consumers be better off in terms of welfare, when you compare a firm in monopolistic competition, oligopoly, and monopoly to one in perfect competition?

Where do you find this information?

Explanation / Answer

Fast Food restaurant business:

The fast food restaurant business tend to display characteristics of perfect competition because of a large number of restraints open up in town offering similar food items at a competitive price. There are firms in perfect competition chose to be open on Monday being the slowest day of the week in order to come up with discounts on their product to increase their sale. The value-menu fast-food restaurant decide to be open on Mondays when there are other restaurants shut on the same day. It would give business to the one being open on same day offering discount on food items to ell its product.

The manager of the value-menu fast food restaurant would bring changes under:

1>monopolistic competition: There could be rise in the price of the products and services offered to the customers.

2>Oligopoly: The prices are kept in marginal range to perform business in revenues on a long-run

3> Monopoly: It would offer rise in price and not in the supply of the product.

The profits would be more if the business if conducted for customers satisfaction. As it would show rise in demand and supply for a long run. The customers would be better in terms of welfare with respect to oligopoly competition like in perfect competition rather than in monopolistically competition and monopoly.

References:

http://businesscasestudies.co.uk/mcdonalds-restaurants/the-route-to-fast-food-franchising/introduction.html

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