Econ 385 Problem Set 2

Econ 385 Problem Set 2 - 1. Consider the forthcoming plight. The gas distributer Dot, is the solely gas distributer in a undoubtful town. This town is constituted by a highway of 1 mile. The distributer is lodged precisely in the intermediate of the highway. The consumers are unintermittently as sorted parallel the highway and visage a deportment absorb t per ace of space. The consumers entertain a valuation of V for buying gas. (a) Consider that the gas distributer is deciding how abundantly to impeach for gas. What appraisement per gallon should he impeach if he would enjoy to sell to all the consumers? (b) If the ﬁrm considers start a new gas distributer (and relodge his old one), where should he lodge the distributers? How does the optimal appraisement shift when there are 2 distributers? (c) Consider that start a new distributer has a absorb of F = 1. If t = 20, how manifold gas distributers should the ﬁrm unreserved? (d) Claim that some highway composition achieve be manufactured in the intermediate of the highway such that the left consumers cannot rustication to the exact and the exact consumers cannot rustication to the left. Would this aﬀect the optimal location of the two distributers? (use solely your recognition to answer this topic). 2. Consider the copy of two-of-a-trade delay diﬀerentiated fruits à la Hotelling. A population of consumers is as sorted unintermittently in a outoutsequence of tediousness 1. A seller is placed at 0.25 of one end of the outoutsequence and the other at 0.25 of the other end. Deportment absorb of each consumer is t per ace of tediousness traveled. (a) Determine the ask-for of seller 1, D1, abandoned the appraisement ﬁxed by seller 2. (b) Compute the appraisement elasticity of the ask-for. (hint: elasticity ε is (c) How does the elasticity shift as a character of the bliss absorb? Justify economically. 3. Consider a bargain in which two ﬁrms rival in appraisements, and they oﬀer a vertically diﬀerentiated fruit (i.e. diﬀerentiated by power) vi(i = 1, 2). In detail claim v1= 1 and v2= 2 and wheedle ui(x) = V + xvi−pi the service of consumer x ∈ [0, 1] if he/she buys miscellany viat appraisement pi. (a) Oﬀer a graphical truthfulness of the overhead contrast when V = 10 and p1= 0.25 and p2= 0.5. (b) Assuming cipher fruition absorbs, trace the equilibrium appraisements and demands. (c) Compute the equilibrium proﬁts at b. and c. Discuss how the proﬁts depend on the power diﬀerence.
Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing

Our guarantees


Money-back guarantee


Read more

Zero-plagiarism guarantee


Read more

Free-revision policy


Read more

Privacy policy


Read more

Fair-cooperation guarantee


Read more

Calculate the price of your order

550 words
Total price:
The price is based on these factors:
Academic level
Number of pages