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Q. Assume that only way to reach a certain restaurant is by train and train fare is $3. One day a law is passed requiring restaurant owner to provide free transportation to his restaurant which he does by making an arrangement with railroad whereby his customers ride free and he pays $3 fare per customer directly to railroad.
a) Illustrate what does do to supply curve for restaurant meals?

b) Illustrate what does this do to demand curve for restaurant meals?

c) Compare cost customers pay for meals before and after law passed. Same thing is for seller.

d) Who profit by this law? Under Illustrate what circumstances would restaurant voluntarily provide free transportation? Use a supply and demand graph to justify your answer.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M9292731

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