Indira is attracted by the profits that Soumya and Snigdha and opens shop at the midpoint...
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Indira is attracted by the profits that Soumya and Snigdha and opens shop at the midpoint of the beach. Her costs are the same as Soumya and Snigdha. (a) What is the location of the customer who is indifferent between buying form Snigdha and Indira? What is the location of the customer who is indifferent between buying from Soumya and Indira? (b) At the prices found in part d) of the first question, what price would Indira set? What profit would Indira earn? What profit would Soumya and Snigdha now earn? Would Soumya and Snigdha be happy with this scenario, would they like to lower their prices, or raise their prices? (c) What are the new equilibrium prices, quantities, and profits for each shop? Indira is attracted by the profits that Soumya and Snigdha and opens shop at the midpoint of the beach. Her costs are the same as Soumya and Snigdha. (a) What is the location of the customer who is indifferent between buying form Snigdha and Indira? What is the location of the customer who is indifferent between buying from Soumya and Indira? (b) At the prices found in part d) of the first question, what price would Indira set? What profit would Indira earn? What profit would Soumya and Snigdha now earn? Would Soumya and Snigdha be happy with this scenario, would they like to lower their prices, or raise their prices? (c) What are the new equilibrium prices, quantities, and profits for each shop?
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To solve this problem lets denote the location of Soumyas shop as xs and the location of Snigdhas sh... View the full answer
Related Book For
Auditing Assurance Services and Ethics in Australia an Integrated Approach
ISBN: 978-1442539365
9th edition
Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler
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