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Next to its plant, a manufacturer of dinner plates has an outlet store that sells plates of both first quality (perfect plates) and second
Next to its plant, a manufacturer of dinner plates has an outlet store that sells plates of both first quality (perfect plates) and second quality (plates with slight blemishes). The outlet store sells a relatively large share of seconds. At its regular stores elsewhere, the firm sells many more first-quality plates than second-quality plates. Why? (Assume that consumers' tastes with respect to plates are the same everywhere and that there is a cost, s, of shipping each plate from the factory to the firm's other stores that is added to the retail store price.) Determine how the relative prices of plates differ between the two types of stores. Let the retail price of first-quality plates be p and let the retail price of second-quality plates be p If perfect plates are measured on the horizontal axis of an indifference map and seconds are measured along the vertical axis, then the budget line's slope at the factory outlet (in terms of prices) is -P P2 (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_character.) Continue to assume that perfect plates are measured on the horizontal axis of an indifference map and seconds are measured along the vertical axis. The slope of the budget line at the retail stores is (Properly format your expression using the tools in the palette.)
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