(1) Von-Thünen Model I A coffee shop is located at M (where x=0) and charges marginal cost prices for its coffee (i.e., c-p). Customers walk to the coffee shop to buy coffee and, aside from the purchase price, incur travel cost of (tx²), measured from the shop. The shop's market reach is 2.3 km and t=2. If customers' WTP for the shop's coffee is $12.83 what is the product's price in equilibrium?

(1) Von-Thünen Model I A coffee shop is located at M (where x=0) and charges marginal cost prices for its coffee (i.e., c-p). Customers walk to the coffee shop to buy coffee and, aside from the purchase price, incur travel cost of (tx²), measured from the shop. The shop's market reach is 2.3 km and t=2. If customers' WTP for the shop's coffee is $12.83 what is the product's price in equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

(1) Von-Thünen Model I
A coffee shop is located at M (where x=0) and charges marginal cost prices for its coffee
(i.e., c-p). Customers walk to the coffee shop to buy coffee and, aside from the
purchase price, incur travel cost of (tx²), measured from the shop. The shop's market
reach is 2.3 km and t=2.
If customers' WTP for the shop's coffee is $12.83 what is the product's price in
equilibrium?

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