Question

Restaurants typically charge much higher prices for dinner than for lunch, despite the fact that the cost of serving these meals is about the same. Why do you think this is the case? (Hint: Think about the primary consumers of these meals and their respective elasticities.)

Answer 1

Answer on Question #37891, Economics, Microeconomics

Demand is greater at dinner. Since lunch is often a lighter meal, there are therefore a greater number of possible substitutes and a restaurant has to lower its price point to compete with fast-food, and fast-casual establishments which are not normally competitors for dinner customers.