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Consider an industry consisting of three firms located respectively at points 0, 1/4 and 1 on a linear city of length 1. Firms face marginal cost of production $2 and no fixed costs. There are 10 consumers uniformly distributed on this linear city. Consumers have unit demands and derive the same value of consuming the products of all firms. The travel cost is t > 0.
1. Suppose that the market is covered (all consumers consume). What is the demand that each firm faces? How does it depend on own and rival price? Why?
2. Suppose that firms simultaneously choose prices and t = $1. What is the Nash equilibrium of this game? Discuss the relationship between the equilibrium prices and the marginal cost of production.
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The shop operates 365 days a year. Setup cost is $60 for blueberry candles, regardless of how many boxes of blueberry candles are produced, and holding cost is $24 per box per year. Which of the following is closest to the maximum number of blue..
Those companies from which you purchase products and services are not pure sellers of services, nor are they pure sellers of products.- What services does a department store provide? What goods does a dentist provide?
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Are these trends uniquely different for ancillary services vs. inpatient services? Where do you see the trends going in the future and why?
Destructive Discounting Jeff Carter was recently appointed vice president of sales at Marathon Electric, a manufacturer of small engines. Marathon Electric had grown rapidly over recent years, but its profit margins were declining and Jeff was brough..
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