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In Tuftsville, everyone lives along Main Street, which is 10 miles long. There are 1.000 people uniformly spread up and down Main Street, and every
In Tuftsville, everyone lives along Main Street, which is 10 miles long. There are 1.000 people uniformly spread up and down Main Street, and every day they each buy a fruit smoothie from one of the two stores located at either end of Main Street. Cus- tomers ride their motor scooters to and from the store using $0.50 worth of gas per mile. Customers buy their smoothies from the store offering the lowest price, which is the store's price plus the customer's travel expenses getting to and from the store. Ben owns the store at the west end of Main Street and Will owns the store at the east end of Main Street. Return to Main Street in Tuftsville. Now sup- pose that George would like to open another store at the midpoint of Main Street. He must pay Tuftsville an addional $250 per day to operate this new store.If Ben and Will do not change their prices, what is the best price for George to charge? How much profit would he earn? a. Chapter 10, p. 262, Question 5 part a. Assume the information from Question 4 for this answer. Assume Ben and Will set a price of 511. b. What are Ben or Will's profits if George indeed opens his store and charges the price in (a)
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