Key objective: discovering zero economic profit in a small-business operating in the perfect competition of market structure.

Setting: As a manager and an entrepreneur, you will face a new challenge – business venture structured on the theory of the firm. You are opening a restaurant in White Plains, NY ( Ruby Mae Soul Food Restaurant). As to simplify the scope of your consideration, we narrow down the problem with several assumptions. You will be serving just a meal in the evening. You also consider a stable level of sales at the full capacity reached; just ignore the slow period of market entry. Make your assessment only per one-month period. Make sure that the targeted level of operations is feasible.

Instruction: You need to apply and discuss relevant economic concepts and tools with supporting data to solve this real-life imitating simulation.  Please include also a one-page executive summary for the business plan with assumptions and the goal set, based on the market conditions examined by you. Please make sure that all parts fit in well and make a comprehensive picture with the compromise on the final concept of the business model adopted.

Outline: Please analyze, based on the demand and supply model, the following issues:

     number of meals sold and prices charged,

     price elasticity of demand and how to address it in your business

     total revenue

     possible challenges

     fixed costs and variable costs and marginal cost

     cost of inputs

     total cost and unit cost (average total cost)

     diminishing marginal product

     economies and diseconomies of scale

•      total profit and profit per unit.