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Homework answers / question archive / Dylan runs a small Japanese noodle restaurant in a local district
Dylan runs a small Japanese noodle restaurant in a local district. There are quite a lot of restaurants and fast food shops located nearby. a) Dylan always thinks that his Japanese noodle is unique and delicious. It deserves getting a higher price so that he can earn more. Can you explain ‘why Dylan wants to increase the price to increase his revenue” based on your Economics knowledge? Illustrate your explanation with a diagram. (8 marks) b) Two months ago, Dylan increased the menu prices of all the food he provides in his restaurant. However, he is disappointed to ?nd that this only leads to a signi?cant drop in the revenue. (i) Explain the reason why the result does not support what Dylan’s decision of increasing the menu prices. What is the actual demand condition situation faced by Dylan. Illustrate your explanation with another diagram. (8 marks) (ii) As Dylan wants to increase his total revenue, what is your suggestion? Explain.
