Profit Maximizing Behaviour

Happy Chinese New Year. Welcome the year of the Ox. A Feng-Shui Master said that the Ox this year represents a endurance amid the financial turmoil, as the hard working Ox which never complains being asked to drag the soil cultivator machine. Hope the financial crisis ends soon. Some economists said that we might see the turning point of the crisis by mid-2009.

Anyway, that is not what I want to talk about. Here in Hong Kong, Chinese New Year is a public holiday and it is a 3-day off starting from yesterday. During the Chinese New Year, many economics units (shops, restaurants, firms) are usually not producing services.

I would to talk about restaurants in HK during this festive seasons. As many of the restaurants are closed, supply of eating placed falls (while demand remains relatively constant in some areas). The fall of supply is seen by the restaurant's owners as an opportunity to raise profit (converting consumer surplus into its of producer, in economic terms). Just now, I had my dinner in the restaurant I used to go. For these 3 days, they will charge customers of 10% VAT (they never do it on non-festive seasons). It was funny. I do not think that the tax will be paid to the government though. Hahaha. What an opportunist.

Profit Maximizing Behaviour. In Economics, Economics Unit are assumed as profit maximizing unit as well as minimizing cost.

Economics is just around you.