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 . 4. Houston has 100 restaurants, 99 of which employ chefs of...

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 . 4. Houston has 100 restaurants, 99 of which employ chefs of...

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4. Houston has 100 restaurants, 99 of which employ chefs of 'normal' ability at a salary of $50,000 per year. These 99 restaurants earn revenue of $250,000 per year, which is just enough to ensure a normal profit for the owners. One restaurant employs Duke who is a highly skilled chef. Duke's food is so good that customers are willing to pay twice as much to eat his food and his restaurant earns $500,000 in revenue. a. Assuming the market is in long-run equilibrium, how much will Duke earn per year? b. How much of Duke's salary is economic rent? c. How much economic profit will the restaurant owner earn?...

 

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