If too many restaurants open during the period, some will lose money. If too few restaurants open, they will make profits that will attract new entrants in later periods. Session 2 introduces a sales tax on each restaurant meal sold in order to simulate the effects of an increase in the variable cost of business. Bergstrom, Theodore and John H. Miller. Experiments with Economic Principles .
Output is recorded and various productivity measures are calculated.
Diminishing returns should be observed quite clearly. Illustrate the role of comparative advantage and specialization in generating gains from trade. Bergstrom, Theodore and John H. Miller. Experiments with Economic Principles . Every worker has 20 hours of labor to divide between producing bread or fish.