Question
A BP franchisee owns two gas stations in the metro area: one in Detroit, and the other in West Bloomfield. He faces the following demand
A BP franchisee owns two gas stations in the metro area: one in Detroit, and the other in West Bloomfield. He faces the following demand conditions: He has estimated that the demand for gasoline at his Detroit location is QDet = 60 - 20PDet, and QWB = 80 - 20PWB, where Q is in thousands of gallons sold per week, and P is in dollars/gallon. It costs him $1.50 per gallon to distribute the gas he obtains from BP. Assuming no fixed costs.
If he can only obtain 20 thousand gallons of gas from BP per week, how should he allocate the gasoline between the two gas stations?
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