Product differentiation via location

Assignment Help Business Economics

Reference no: EM131083297

Product Differentiation via Location: A salesman’s territory is a single, mile-long street. Consumers of his product are equally distributed along the street. He has decided to set up a store to sell his product. In addition to this salesman, there is a second vendor of the same product who is also considering establishing a store on the street. Each store will sell its goods for the same price and each consumer will shop at the store located closest to them (purchasing from the store with the lowest travel costs). It may be helpful to draw simple diagram to accompany your answers.

(a) If the first salesman were the only retailer on the street, where should he locate himself in order to minimize the distance travelled (and hence the costs incurred) by his consumers.

(b) What is the socially optimal location for the two stores to be located? That is, what location is best for all consumers in terms of reducing travel distances?

(d) Suppose the store owners can freely choose their locations. Where will they locate? Find the locations such that each store has no incentive to move. Is this allocation efficient? Why or why not?

Reference no: EM131083297

Questions Cloud

Making debt payments for at least the next year : Ngela owes $500 on a credit card and $2,000 on a student loan. The credit card has a 15 percent annual interest rate and the student loan has a 7 percent annual interest rate. Her sense of loss aversion makes her more anxious about the larger loan. S..

Determine the two financial ratios that you believe : Determine the two financial ratios that you believe to be the most important indicators of financial health for a company. Predict two positive or two negative financial outcomes should the chosen ratios change dramatically from one year to anothe..

What will be the equilibrium quantity : The Competitive Fringe: Consider a market with one large firm and many small firms. The supply curve of the small firms taken together is S(p) = 100 + p. The market demand curve for the product is D(p) = 200 − p. The cost function for the large firm ..

Calculate the theoretical potential of each of the cells : Calculate the theoretical potential of each of the following cells.

Product differentiation via location : Product Differentiation via Location: A salesman’s territory is a single, mile-long street. Consumers of his product are equally distributed along the street. He has decided to set up a store to sell his product. In addition to this salesman, there i..

Inform the user about incorrect responses : Write a program named program31.py that prompts the user to enter an exact multiple of 7. Your program should respond positively to correct inputs and politely inform the user about incorrect responses.

Find the autocorrelation of the output : (a) What is the impulse response hn? (b) Find the autocorrelation of the output Yn when Xn is a wide sense stationary random sequence with µX = 0 and autocorrelation

Cornerstone of academic writing : For all papers submitted to this class, APA (6th edition) format is required. The cornerstone of academic writing is "compare and contrast" which is what you will be doing when you discuss how your selected article applies to the concepts studied i..

Should the ceo and cfo sign the certification : Who are the stakeholders in this situation? Should the CEO and CFO sign the certification? Explain why or why not. What are the CEO's and CFO's alternatives?

User Account

All Pages