What are the prices each store will charge for hamburgers

Assignment Help Business Economics

Reference no: EM13771131

Assume a linear town with 100 potential costumers that are uniformly distributed on a unit mile. Each consumer has a willingness to pay for a great tasting hamburger of $30, and would buy only one these hamburgers per week. It cost a resident $10 per mile to travel. Assume two hamburger stores are considering opening shops on opposite ends of the street. After opening, each store would have a marginal cost of $5 per hamburger, an there is no fixed cost for opening a store.

(a) What are the prices each store will charge for hamburgers? What would their profits be?

(b) Intuitively, would both stores be happy with their price and location choice, or would one of them want to change their price/location? In fact, what would happen to the firm’s prices if they were located right next to each other?

(c) Suppose the firms decide to merge (i.e., they become a monopolist). What would the firm’s incentive to merge be (assume that the firms would serve the entire market after the merger)?

Reference no: EM13771131

Questions Cloud

How do increases in product quality z affect demand : A monopolist faces the inverse demand curve P = 22 ? Q/(100z), where z is an index of quality. The monopolist incurs a cost per unit of c = 2 + z^(2). (a) How do increases in product quality z affect demand?

Discuss the major codes of ethics of the stakeholders : Discuss the major codes of ethics of the stakeholders involved in the issue and how these codes will affect the decision-making process and the final decision

Applied statistics in business and economics : What are the steps espoused by Applied Statistics in Business and Economics (or the instructor) for formal hypothesis testing? Explain why the sequence is important.

Types of on the job hazards : Defend or refute the following statement: First aid training is not an important training factor for employees. Do you believe first aid training is important? What types of on the job hazards can result in the need for first aid? Explain.

What are the prices each store will charge for hamburgers : Assume a linear town with 100 potential costumers that are uniformly distributed on a unit mile. What are the prices each store will charge for hamburgers? What would their profits be? (b) Intuitively, would both stores be happy with their price and..

Create a new project in ide named exceptionhandler : Write code to accept numbers as described above from the user. Your code should ensure that only numbers are accepted.

Evaluation of pro forma financial statements : Assuming that the executive leadership includes several former accountants, how would the organizational goals influence the preparation and evaluation of pro forma financial statements?

Can terrorist use a toxic industrial chemical : Can terrorist use a Toxic Industrial Chemical (TIC) that is all ready here in the U.S. instead of bringing one into the country

What is your competition : What is your competition? How much should you charge for the products or service? What advice do you need and who can provide it?

User Account

All Pages