Economic concepts applied to restaurants

People respond to incentives

An incentive something that which induces a person to act, in the prospect of reward or punishment. restaurants provide discounts to customers so that it attracts them. customers respond to incentives.

Economies of scope

Economies of phenomena where single input is used to provide various output and production leads to cost savings. Restaurants uses the same utensils and cooks as a single input and provide various output.

Monopolistic competition

In monopolistic competition, there will be number of firms and anyone can enter into that market. The product could be differentiated from one another. In case of restaurants there are no entry barriers.

Law of diminishing marginal utility

many star hotels provide unlimited buffet like in barbeque nation, this comes under a concept of law of diminishing marginal utility. In barbeque nation they provide buffet at a price of 900 which is unlimited food. May be person who ordered can consume food which costs 500. As the consumption increases, consumer utility reaches to a level. So that they cannot eat more than that.

Price description by self-selection

consumers are self-selecting themselves. They got to restaurants which provide online payment so that they can get cashback through third party apps.