(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?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2.2CE

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