Question

A new Japanese restaurant opens two blocks from your home. The owner, Reiko, is a personal friend of yours. You don't particularly like Japanese food, but you decide to go anyway; however, there is nothing on the menu that sounds appealing. Unfortunately, it turns out that most of the people in your town don't like Japanese cuisine either. Reiko confides that business is not good, but she isn't sure what to do from an economic standpoint. Which of the following would most likely describe Adam Smith's perspective on this problem? Select one: a. Reiko should ask the government for assistance. b. Reiko should close the restaurant and find a different career. c. Reiko should lay off workers and do everything herself to save money. d. Reiko should add other foods to the menu and offer discounts to attract more people to her restaurant.

Answer 1

The answer is: d. Reiko should add other foods to the menu and offer discounts to attract more people to her restaurant.

According to Adam smith, Producers need to provide a product that is needed by the market in order to obtain profit, not the other way around.

Since the majority of the people in the cities did not like Japanese food, Seiko need to accept the fact that there is not enough demand for that particular food and start to develop new menus that attract the locals (she can do this by mixing some characteristics from Japanese food with western food).

On top of that, offering discounts create an incentives for the consumers to come and try the new products.