Suppose there are two firms selling protein bars. Firm 1 sells 'AggieBars' with 10 grams of protein and firm 2 sells 'DavisBars' with 20 grams of protein. Consumers are distributed uniformly over their preferences for grams of protein between 10 and 20. Suppose firm 1 sells AggieBars for $2 and firm 2 sells DavisBars for $3. The 'cost' to consumers of deviating from their optimal amount of protein is $0.20 per gram. a. What protein content does the marginal consumer (the consumer who is indifferent between AggieBars and Davis Bars) prefer? The equation for finding the marginal consumer (when the range of product attribute values is 10) is V-p1tx m = V - p2 - t(10 −x m) 4 b. How would the proportion of consumers buying each product change if the cost to deviation from one's optimal amount of protein increased (was greater than $0.20 per gram)?

Suppose there are two firms selling protein bars. Firm 1 sells 'AggieBars' with 10 grams of protein and firm 2 sells 'DavisBars' with 20 grams of protein. Consumers are distributed uniformly over their preferences for grams of protein between 10 and 20. Suppose firm 1 sells AggieBars for $2 and firm 2 sells DavisBars for $3. The 'cost' to consumers of deviating from their optimal amount of protein is $0.20 per gram. a. What protein content does the marginal consumer (the consumer who is indifferent between AggieBars and Davis Bars) prefer? The equation for finding the marginal consumer (when the range of product attribute values is 10) is V-p1tx m = V - p2 - t(10 −x m) 4 b. How would the proportion of consumers buying each product change if the cost to deviation from one's optimal amount of protein increased (was greater than $0.20 per gram)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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