Modern Principles: Microeconomics
3rd Edition
ISBN: 9781429278416
Author: Tyler Cowen, Alex Tabarrok
Publisher: Worth Publishers
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Chapter 2, Problem 2C
To determine
Division of knowledge and productivity.
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Consider a standard Hotelling model of competition with quadratic transportation costs. The consumers are located uniformly
along a segment of unit length. There are two firms, A and B, located at the opposite ends of the segment. Each firm has
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cost of 4 times the square of traveled distance.
Find equilibrium price and profit of firm A when firms set a unform price for the entire Hotelling segment.
Suppose now that firms can price discriminate between consumers located in the interval
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(interval 1) and those located
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(interval 2). Find equilibrium prices of firm A and B on the interval 1.
Answer:
equilibrium uniform price of firm A =
profit of firm A under uniform pricing =
equilibrium price of firm A on interval 1 =
equilibrium price of firm B on interval 1 =
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Please send me the graph for part f
You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant from your competitors by offering northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant market in your hometown after you open?
Part 2
A.
While the demand curves facing your competitors becomes more elastic, your demand curve will be inelastic.
B.
The demand curve facing each restaurant owner shifts to the right.
C.
The demand curve facing each restaurant owner becomes more elastic.
D.
Your competitors are likely to change their menus to make their products more similar to yours.
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Modern Principles: Microeconomics
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- I need help with #12 pleasearrow_forwardThe U.S. Census Bureau conducts annual surveys to obtain information on the percentage of the voting-age population that is registered to vote. Suppose that 679 employed persons and 690 unemployed persons are independently and randomly selected, and that 429 of the employed persons and 369 of the unemployed persons have registered to vote. Can we conclude that the percentage of employed workers (P1), who have registered to vote, exceeds the percentage of unemployed workers (P2), who have registered to vote? Use a significance level of α = 0.05 for the test. Step 3 of 6: Compute the weighted estimate of p, p. Round your answer to three decimal places.arrow_forwardOn Saturday nights, the population share of viewers watching various broadcast TV networks are known to be: ABC 29% CBS 28% NBC 25% Other 18% A sample of 300 viewers on Sunday night showed the following numbers watching each network: ABC 95 CBS 70 NBC 89 Other 46 46arrow_forward
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