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 COVID-19, there are some restrictions on the number of customers on the same table and the distances between tables in the restaurant

Economics

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 COVID-19, there are some restrictions on the number of customers on the same table and the distances between tables in the restaurant. Therefore, during lunch or dinner hours, patrons of many restaurants need to wait for a long time before there are tables for them.

a) Explain the concepts of “pecuniary price”, “non-pecuniary price” and “full-economic price” using this example with a diagram. (6 marks)

b) Is the full-economic price affected by the price elasticity of demand, the price elasticity of supply, or both? Explain. (No diagram is needed). (5 marks)

c) As a manager of a Chinese restaurant and you would like to develop a linear demand function of your restaurant. Suggest FOUR variables that you will include in this function and also indicate whether the coefficient of the variables is positive or negative number with brief explanation. (4 marks)

d) What should the restaurant managers consider when they are making the decision on the temporary closure of restaurants during the period of COVID-19? (3 marks)