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4. Kufri village is located in the Himalayan region, with a population of 2000 inhabitants uniformly distributed between kilometers 35 and 37 of the road.
4. Kufri village is located in the Himalayan region, with a population of 2000 inhabitants uniformly distributed between kilometers 35 and 37 of the road. There exist two restaurants at each end of the road. Restaurants compete in prices. Inhabitants utility function is as follows: U. = 35 - p - to, where p is the price of the Menu, t the transportation cost, and a the walking distance to the restaurant. Restaurants incur a marginal cost equal to 10: ") Compute the demands, equilibrium prices and the HHI index, b) A new restaurant has been opened at kilometer 36,2 of the road. The local go- vernment has implemented a new quality certificate which increases the marginal costs of the three restaurants from 10 to 20. Assume that the transportation cost is equal to 1. Compute the demands, equilibrium prices and the HHI index
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