Hotelling Model of Locations True & False Questions Q. In the Hotelling model of locations (brands), the higher the number of locations (brands), the is the product price, and the monopolist who produces all these locations (brands) is likely to earn profit. a) Lower; zero b) Higher; zero c) Higher; positive d) Lower; positive Q. In the Hotelling model of locations (brands), if t = $3, the total number of consumers is 2,000 and fixed cost of setting up each location (brand) is $300, the firm will have locations (brands) and the socially optimal number of locations (brands) is a) 5; 4 b) 2; 1 c) 3; 2 d) 4; 3 Q. In the Hotelling model of locations (brands), the socially optimal number of locations (brands) is than the optimal number for the private firm. A reason for this difference is that a) Higher; price falls when Frises, which decreases producer surplus b) Lower; price rises when t rises, which decreases consumer surplus c) Lower; price rises when n rises, which decreases consumer surplus d) Higher; price falls when V falls, which decreases both consumer surplus and producer surplus Q. In the Hotelling model of locations (brands), if the firm decides to produce n = 5, these five stores (brands) should be located at on the one-mile street. a) 1/5; 2/5; 3/5; 4/5; 1 b) 1/10; 3/10; 5/10; 7/10; 9/10 c) 0; 1/6; 3/6; 5/6; 1 d) 0; 1/4; 2/4; 3/4; 1