a) How would you classify the market for Asian meals in the East End?
The market for Asian meals in east end is classified as Imperfect Competition. Markets in which competing firms have power to set their own prices are called imperfect competition. The Asian meals market is an example of one type of imperfect competition, monopolistic competition. This is a market structure in which a large number of firms compete, produce differentiated products, are free to enter and exit and compete on product quality, price, advertising and branding.
Adelaide’s East End has numerous Asian style restaurants competing for market share. However in comparison to rest of the restaurants in the area each firm supplies a small part of the total hospitality industry output. As a result, each Asian restaurant has restricted market power to influence the price of its product. A monopolistically competitive firm's demand curve is highly elastic, permitting it to vary its price within a narrow range of prices. The other firms' products are very close substitutes. This is the case with the restaurants in the East End; they produce similar meals within a narrow price range of each other.
The Asian restaurants in Adelaide’s East End produce differentiated products. The differentiated products are imperfectly substitutable in consumption. This means that if the price of one good were to rise, some consumers would switch their purchases to another product within Asian Meal market. From the perspective of a firm in the industry, it would face a downward sloping demand curve for its product, but the position of the demand curve would depend upon the characteristics and prices of the other substitutable products produced by other firms. It is also worth mentioning that th ...