The market for athletic shoes is intensely competitive. In 2016, Sports Authority, one of the firms in the market, declared bankruptcy and closed its 460 stores. An Associated Press article discussed the effect of the closings of the Sports Authority stores on Foot Locker’s store in the New York City borough of Manhattan and quoted Foot Locker’s CEO as stating: “We realized a long time ago that we couldn’t be everything to everybody [in one store]. We have definitive brands and experiences.”

a. Draw a graph showing the effect on Foot Locker’s Manhattan store of the exit of competing Sports Authority stores. Be sure that your graph includes the Foot Locker store’s demand, marginal revenue, marginal cost, and average total cost curves. Your graph should show changes in any of the curves. It should also show any changes in the area representing the store’s economic profit (or loss). Be sure to explain any assumptions you are making.

b. Why would Foot Locker’s CEO emphasize that the store will have “definitive brands and experiences?”
Wouldn’t trying to be “everything to everybody” be a better strategy because the store might attract a larger number of customers? Briefly explain.