Question 19 relies on the following information: Vendors L and R sell a homogenous output at prices P, and PR. Vendor L is permanently located at Location 1, Vendor R is permanently located at Location 3. Customers are spread across locations as shown below. Customers buy from whichever vendor offers a better, non-negative value, where a customer's value is given by the function V = 10 – P-4t, where V, is the value to customer i, P, is the price they paid for the item, and t is how far they traveled to obtain it. If a customer receives equal value from L and R, that customer is split evenly. What price will Vendor L charge in equilibrium? Location 2 Location 1 (Home of Vendor L) 14 Location 3 (Home of Vendor R)

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Question 19 relies on the following information:
Vendors L and R sell a homogenous output at prices P, and PR. Vendor L is permanently located at
Location 1, Vendor R is permanently located at Location 3. Customers are spread across locations as
shown below. Customers buy from whichever vendor offers a better, non-negative value, where a
customer's value is given by the function V = 10 – P - 4t, where V, is the value to customer i, P, is the
price they paid for the item, and tį is how far they traveled to obtain it. If a customer receives equal value
from L and R, that customer is split evenly.
What price will Vendor L charge in equilibrium?
Location 3 (Home of Vendor R)
Location 1 (Home of Vendor L)
14
Location 2
Transcribed Image Text:Question 19 relies on the following information: Vendors L and R sell a homogenous output at prices P, and PR. Vendor L is permanently located at Location 1, Vendor R is permanently located at Location 3. Customers are spread across locations as shown below. Customers buy from whichever vendor offers a better, non-negative value, where a customer's value is given by the function V = 10 – P - 4t, where V, is the value to customer i, P, is the price they paid for the item, and tį is how far they traveled to obtain it. If a customer receives equal value from L and R, that customer is split evenly. What price will Vendor L charge in equilibrium? Location 3 (Home of Vendor R) Location 1 (Home of Vendor L) 14 Location 2
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