1.
All-you-can-eat restaurants allow customers to eat as much as they
want for a fixed price. These...

Question

1.
All-you-can-eat restaurants allow customers to eat as much as they
want for a fixed price. These types of
restaurants must make money or they would not remain in business. How can they earn profits when people can
always eat more which would increase the restaurant’s costs as they eat
more? What principle are the restaurants
relying on? How does this work?

2. For which types of business organization is unlimited
liability going to apply to – a sole proprietorship, a partnership or a
corporation? Now explain out of those
business organizations, for which one will unlimited liability be the greatest
problem for? Why?

3. Suppose a consumer is at an optimum, consuming 6 hamburgers
a week at a price of $1.50 each and 10 donuts a week at 50 cents a donut. If the price of a hamburger increases to
$2.00, what will the consumer do to arrive at a new equilibrium? Why?4. You expect to
receive a payment of $200 one year from now.Your
discount rate is 5%.What is the present
value of the paymentto
be received ?Suppose
that your discount rate rises to 6%.
What is the presentvalue
of the payment to be received?

David · Accepted Answer

1. All-you-can-eat restaurants allow customers to eat as much as they want for a fixed price. These 
types of restaurants must make money or they would not remain in business. How can they earn 
profits when people can always eat more which would increase the restaurant’s costs as they 
eat more? What principle are the restaurants relying on? How does this work?
Solution: 
These restaurants can make money by charging a cost which is slightly higher than the average bill a 
consumer pays if he eats in normal circumstances.  
The principle on which these restaurants rely is that all the person will not very high quantity of food 
some will eat more while some will eat less thereby making an overall profit for the restaurants.
2.

1. All-you-can-eat restaurants allow customers to eat as much as they want for a fixed price. These types of restaurants must make money or they would not remain in business. How can they earn profits...

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