To explain:
The method used in allocation of table resources in the given three restaurants.
Answer to Problem 1SPPA
Company M is a place where usually anyone goes. Art Restaurant will attract middle-class income earners and upper-middle class income earners and LB in NY City will attract the upper-middle class income earners and high-income earners.
Explanation of Solution
Company M does not accept reservations as it is restaurant where one can sit and have a meal. All types of people visit Company M since its menu prices are not costly. Thus, there is no allocation of table and most people who visit Company M are willing to wait till a seat is vacant, hence reservation is not accepted.
Art restaurant is usually a target for middle-class income earners and upper-middle class income earners and people. The people who want to visit this restaurant prefer to either wait for a vacant seat or they reserve in prior in order to eliminate waiting.
LB in NY City focuses more on the upper-middle class income earners and high-income earners and usually these types of people visit this restaurant. Hence, for these elite people to eliminate waiting and to maintain the restaurant's class, reservation is vital.
Resource allocation:
Allocation of resources refers to distribution of resources amongst different uses. Resource allocation awakened as a problem of the society as there is only limited supply and human wants are unlimited.
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Chapter 6 Solutions
Foundations of Economics (8th Edition)
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