Answered: In the Hotelling model of locations…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Transcribed Image Text:In the Hotelling model of locations (brands), if the firm decides to produce n = 5, these five stores (brands) should be located at on the one-mile street. O a. 1/10; 3/10; 5/10; 7/10; 9/10 O b. 0; 1/6; 3/6; 5/6; 1 O c. 0; 1/4; 2/4; 3/4; 1 O d. 1/5; 2/5; 3/5; 4/5; 1 In the Hotelling model of locations (brands), if t = $3, the total number of consumers is 2,000 and fixed cost of setting up each location (brand) is $300, the firm will have locations (brands) and the socially optimal number of locations (brands) is Оа. 33 2 ОБ. 4;B 3 O c. 5; 4 O d. 1; 3 In the Hotelling model of locations (brands), the socially optimal number of locations (brands) is than the optimal number for the private firm. A reason for this difference is that O a. Lower; price rises when n rises, which decreases consumer surplus O b. Higher; price falls when F rises, which decreases producer surplus O c. Lower; price rises when t falls, which decreases consumer surplus O d. Higher; price falls when V falls, which decreases both consumer surplus and producer surplus

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