Question

Think like an economist. Let’s explore what happens when things change. If you were Ratna, what would you do in the following situations? Discuss with your classmates.

Suppose the rent for your space suddenly doubles.

• Will you raise the price of the food served to cover the costs?
• Will you look for a cheaper location? 
• How does this affect your business?

Answer 1

• Yes, I may consider increasing the food prices to cover the rising expenses.
• If the higher prices still do not help me manage the rent, I would look for a more affordable location.
• A doubling of the rent would increase the business’s operating expenses and could significantly reduce its profits.