Spectrum Economics Challenge 5 – 20 SBD to be given away

Hi Everyone,

Welcome to Challenge 5 of my 6 week economics challenge series. I am currently posting information about a new challenge each week. Each challenge will relate to a different aspect of economics. Some challenges will involve participants describing how they respond to a particular situation or set of circumstances and others will involve a more technical approach to a problem or situation.

Voting for Challenge 4 is about to commence and the results of Challenge 3 have just been released. The link to Challenge 3 is available at the end of this post.

So just a quick introduction to my Steemit channel in case you are not familiar with my work. My content relates mostly to economics. I have a combination of technical, analytical, and theoretical posts. I often go into the application of economics and how we can use economics to improve our own lives. I also run several contests. I have puzzle contests that I try to run every week. I also have meme contests that I run monthly. Feel free to participate in these contests. The 6 week economics challenge series brings the economics and competition side of my channel together.

Challenges in the Series

Below are a list of the 6 challenges in this series (Challenges 1, 2, 3 and 4 have been completed and the dot point is a link to the challenge):

Explain how you have or would adapt your lifestyle to a tighter budget.
Explain how you gain value out of your life. E.g. watch movies, visit relatives, etc. Explain if you have a formula for happiness.
Trading game - decide what you will buy or sell, whoever has the most money at the end wins a prize (results will be generated on a spreadsheet and presented in a video). Prizes will also be given out for presenting the logic behind each investment decision. This may sound confusing, don’t worry, the post will explain everything.
Investment strategy - with the information provided in the post, explain which combination of investments you recommend. Mathematical explanation is optional for this challenge.
Restaurant game - where would you set up your restaurant? What would you sell? How much would you charge? The post will provide more information on how you can go about doing this.
Cooperation vs competition game – the post will contain several scenarios where either cooperative or competitive behaviour is possible. The participants need to decide which strategy is better and explain.

Prizes

For this challenge I will be giving away three prizes. These prizes are as follows:

Top post based on the logic used to support recommendations presented in the post wins 10 SBD (I’ll explain later in the post).
Second post based on the logic used to support recommendations presented in the post wins 5 SBD.
Post that receives the highest number of votes during the voting round wins 5 SBD.

Challenge #5

So far we have had two challenges that have involved describing a particular approach to a problem, one challenge that has involved analysis to obtain the highest possible return and another challenge that has both quantitative and qualitative elements. Challenge 5 also requires analysis of both qualitative and quantitative information.

I am calling this challenge the restaurant game. I have created an imaginary town called Merry Town. Participants are required to select a location for a restaurant as well as the type and quality of food and beverages they wish to serve. On the map below, the participants are given a choice of 4 possible sites to start the restaurant. See the map below.

Town Map

Note: letters at the end of each street are abbreviations of the street names, full street names are provided in the site information

The map also contains information regarding the location of other restaurants and food outlets as well as other shops and facilities such as clinics, schools, transport hubs, and recreation/entertainment centres. In addition to the map, participants are also given the following information.

Information regarding the sites

Site A

Located on the High Street (HS) opposite Mike’s Kababs, can also be accessed from Pound Street (PS).
Has high rent because of the location.
Has large volume of cars passing the location.
This location is visible from the Ring Road accessing the High Street.
The car park on Pound Street (next to the site) is rarely full.
Has some people walking by but less than the other end of the High Street.

Site B

Located on Barn Street (BS) in a busy shopping area and is walking distance to the Mall.
Has medium rent because it is located off of the High Street.
Has a low volume of cars passing the location.
Has a small car park located opposite the location; this car park is rarely full.
Even though there are many people in the area, most people do not venture very far down Barn Street.

Site C

Located on Blimp Road (BR) in a small shopping area in a mostly residential area.
Has medium rent because it is located away from the High Street but not low rent as the premises is relatively large compared to other locations (almost twice as big).
Has a medium volume of cars passing in order to access the residential area as well as the school. Weekend traffic is lower than most other locations.
If we exclude loitering students, very few people walk by this location.
The residential area is growing very rapidly.

Site D

Located on the intersection of Monster Street (MS) and Todd Road (TR) next to the town bus terminus and local police station.
Also located opposite the new sports arena and within very close walking distance to the Shopping Mall.
There is also a rapidly growing residential area located nearby.
Has high rent because of close proximity to other town facilities but the rent is still slightly lower than Site A.
Has a very high volume of vehicle and people traffic. These numbers increase during sports events.
Nearest free parking is at Pound Street (PS). Stadium parking is off-limits and the Mall parking fee is only redeemable for those using the Mall (requires purchases to be made in the Mall).

Existing restaurants and food establishments

Restaurant AN (Alfred’s Noddle Bar)

Sells a variety of noodle dishes.
Has won many awards for great tasting noodles.
Restaurant makes an annual profit of $400,000.
Profits are no longer growing.

FC (Food Court in Mall)

Sells a variety of low cost Western and Asian dishes.
Food court has low quality seating.
Each store makes an average annual profit of $50,000.
Profits continue to grow each year which corresponds to population growth.

Restaurant JP (Jane’s Pizzeria)

Sells customised gourmet pizzas.
Restaurant is beautifully decorated.
Jane is the owner and chef.
Last year the restaurant made a profit of $350,000 but the two previous years only managed to breakeven.

Restaurant M (Mike’s Kababs)

Sells low quality greasy kababs.
Food is takeaway only.
Mike is known for abusing customers.
The shop has failed multiple health inspections.
Shop owner (Mike) refuses to disclose profit figures.

Other shops and facilities

Merry Town has many different types of shops making it a self-sufficient little community. Merry Town has its own shopping Mall, which has a large supermarket, department store and two cinema theatres. The Mall also has several boutique and speciality stores. The High Street is lined with many shops which includes bakeries, discount stores, jewellery shops, and even a travel agency.

Merry Town also has a junior high and high school (all-in-one), a health clinic, bus station, and small local police force. The local arena plays host to sporting events on a fortnightly basis. The local basketball team won 2 home games last season, ending their three year losing streak.

Other Information

The population of Merry Town is growing at 4% per annum. Most of this growth is occurring in the new housing estates off of Blimp Road (BR). Most of the people moving to Merry Town are young families with very young children. Merry Town is multicultural town with a wide variety of people with different backgrounds. Merry Town is located only 20 km from the bustling metropolis of Mega City. The crime rate in Merry Town is very low. There were only 10 arrests made last year, 8 of them were at the arena and the other 2 arrests were outside the Kabab Shop.

What I require from the participants

The participants are required to decide on a location for their restaurant. They are also required to state what they will serve at their restaurant as well as the general quality of the food; remember high quality food costs more. The participants need to provide the logic for selecting the location as well as the type of food. The participants are also required to explain why they rejected the other locations.

The participants will be working with a budget that enables all locations to be possible but the risks of selecting a high rent location need to be clearly justified. The participants can be as creative as they like in terms of how they reached their decisions. The decisions do not even necessarily need to be based on highest expected profit. The participants can state their own measures for success.

How to Enter

You can enter either of the 2 remaining challenges. If this week’s challenge does not appeal to you, you can wait for next week’s challenge.

All you need to do to enter is:

Create a post addressing the requirements of the weekly challenge.
Use the tag #sixweekeconomics in your post.
Include Economics Challenge 5 in the title of your post.
Post a link to your post in the comments section of this post.
Upvote this post.

The closing date and time for Challenge 5 is 6PM USA Eastern Time 01/05/2018. Responses after this time will not be accepted.

A second post will be created containing the links to your posts. Steemians will be given the opportunity to vote for the best post. The post with the highest number of votes will win 5 SBD.

Objectives of the series

A key objective of this series is to bring economics closer to everyone. Economics is not something that men in fancy suits talk about on television or only discussed in financial magazines or obscure journals. Economics is something that is all around us and it is important for all of us to understand so that we can make the most out of our lives.