Question

Many restaurants don’t take reservations. You simply arrive and wait your turn. If you arrive at 7:30 in the evening, you have at least an hour wait. Notwithstanding that fact, a few people arrive, speak quietly with the ma?ˆtre d’, hand him some money, and are promptly seated. At some restaurants that do take reservations, there is a month wait for a Saturday evening, three weeks for a Friday evening, two weeks for Tuesday through Thursday, and virtually no wait for Sunday or Monday evening. How do you explain these events using demand and supply?

Short answer

Question: Explain how the concepts of demand and supply can be used to analyze the waiting times at restaurants that don't take reservations and those that do. Answer: The concepts of demand and supply can be used to analyze waiting times at restaurants by examining the relationship between the number of customers willing to dine at a specific time and the availability of seating. At restaurants that don't take reservations, high demand and limited supply of seats lead to longer waiting times. When customers are willing to pay more (e.g. by bribing the maître d'), the supply of seats increases and the demand decreases. In contrast, at restaurants that take reservations, demand varies depending on the day of the week, affecting reservation waiting times. High demand on Friday and Saturday evenings results in limited supply and longer waiting times, while low demand on Sunday and Monday evenings leads to ample supply and shorter waiting times.

Step-by-step solution

Define demand and supply

Demand refers to the quantity of a good or service that buyers are willing and able to purchase at a specific price. Supply, on the other hand, refers to the quantity of a good or service that sellers are willing and able to provide at a specific price.

Analyze the restaurants that don't take reservations

In the case of these restaurants, the demand for seats is high, especially during peak hours such as 7:30 PM. The supply of seats is limited, and that results in an hour-long waiting time for customers. However, some customers attempt to increase the effective price they pay (by bribing the maître d') to get a seat quickly. This indicates that when the price increases, the supply also increases (sellers are willing to provide more seats), and demand decreases (fewer people are willing to pay that extra price) – this is the basic principle of the demand and supply curve.

Analyze the restaurants that take reservations

For these restaurants, we observe that the waiting times to get a reservation depend on the day of the week. Friday and Saturday nights have the highest demand, as most people are willing to dine out on these days. Due to this, there is a higher wait time for reservations (1 month for Saturday and 3 weeks for Friday). On the other hand, Sunday and Monday evenings have very low demand, and thus there is virtually no waiting time for reservations. The variance in demand for different days results in different waiting times for reservations. On days with high demand, such as Friday and Saturday, the supply of available seats is limited. As a result, the equilibrium price (the waiting time in this case) is higher due to scarcity. On days with low demand, like Sunday and Monday, there is a surplus of available seats, and therefore the waiting time is significantly lower.

Conclusion

In summary, the events related to waiting times at restaurants can be explained using the principles of demand and supply. When demand is high and supply is limited, the waiting times increase. Conversely, when demand is low and supply is ample, the waiting times decrease. This analysis helps us understand the dynamics of the restaurant business, as well as the importance of demand and supply in determining factors such as reservation waiting times and seating arrangements.