c) Consider a city which is locate on a long (10 km.) thin island. It has a population density of 100 people per km. which is the same everywhere in the city. Each person drinks exactly 1 cup of coffee per day and are willing to pay $5 per cup. The average cost of selling coffee is simple: the minimum average cost is $2 per cup if it sells 200 cups per day and the average cost rises by 10 cents for every 10 cups more or less than this amount (i.e. one each side of the minimum, the AC curve is a straight line where, for example, the average cost of selling a cup of coffee would equal $3 if it sold 100 cups per day and the average cost would be $4 if it sold 400 cups per day.

i) How many sellers would there be in this city, in equilibrium?

ii) Where do the sellers would locate in equilibrium? For a marginal consumer in that equilibrium, how much benefit do they enjoy, in dollar terms relative to the situation of having only one store in town?