- Imagine there are 3 hot dog vendors on a linear beach 50 yards long. Assume: -Customers are evenly distributed along the beach, located at the endpoints and spaced 5 yards apart. -Production costs are 0. -Both vendors sell hot dogs for p dollars. -The cost to consumers of travel is 1 cent per yard. a. What are the profit-maximizing equilibrium locations, if any, for the three vendors? If there is an equilibrium, what do aggregate travel costs equal? b. What are the socially optimal locations, if any, to minimize travel costs? If there is a social optimum, what do aggregate travel costs equal?

- Imagine there are 3 hot dog vendors on a linear beach 50 yards long. Assume: -Customers are evenly distributed along the beach, located at the endpoints and spaced 5 yards apart. -Production costs are 0. -Both vendors sell hot dogs for p dollars. -The cost to consumers of travel is 1 cent per yard. a. What are the profit-maximizing equilibrium locations, if any, for the three vendors? If there is an equilibrium, what do aggregate travel costs equal? b. What are the socially optimal locations, if any, to minimize travel costs? If there is a social optimum, what do aggregate travel costs equal?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 16CTQ: Would you rather have efficiency or variety? That is, one opportunity cost of the variety of...

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