Final answer:
Mamago should open more restaurants to capitalize on increased demand and economies of scale, as well as to solidify its market position before competitors emerge.
Step-by-step explanation:
Mamago should open more restaurants to increase profit because expanding the number of outlets can lead to higher total profits despite the potential competition. This is due to economies of scale and increased market presence.
When a company experiences an increase in demand for its product, as indicated by the shift in the demand curve, and the main port's reopening allows for more suppliers, increasing the supply, it creates an opportunity for the company to capture more market share by opening additional outlets. Expanding the number of restaurants can lead to economies of scale, resulting in reduced costs per unit due to the greater volume of output. Moreover, it can increase market presence, making it more challenging for new competitors to enter the market and match the established brand's reach.
As seen in monopolistic competition, firms that earn positive economic profits attract new entrants. Therefore, for Mamago, opening more restaurants can act as a strategic move to consolidate its market position before competitors attempt to replicate its success. This proactive expansion can help Mamago maintain its unique selling proposition, be it a unique barbecue sauce or a particular dining experience, making it difficult for potential competitors to lure away customers.