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6. Imagine that In-N-Out starts selling animal-style burgers in Westwood and Santa Monica. Assume that animal-style burgers differentiated enough from other burgers that we can
6. Imagine that In-N-Out starts selling animal-style burgers in Westwood and Santa Monica. Assume that animal-style burgers differentiated enough from other burgers that we can ap- proximate In-N-Out as a monopolist in these markets. Let qw and qsM be the quantities of burgers sold in Westwood and Santa Monica, respectively. The inverse demand for burgers in each location is pw (qw ) = 9-3qw and PSM (qSM) = 12 -29SM. All animal-style burgers are produced in the same factory (before being shipped to different In-N-Out locations), with de- creasing returns to scale. The total cost function for In-N-Out is C(qw, qSM) = (qw + qSM)2. Assuming In-N-Out maximizes profits, what is the optimal quantity of burgers sold in West- wood? (a) qw = 4 (b) qw = 3 (c) qw = 2 (d) qw = 1 (e) qw =
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