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Please help to solve this Industrial Organization (Microeconomics) question. Detailed steps are required. Thanks! There are N tourists uniformly distributed along Orchard Road, which is

Please help to solve this Industrial Organization (Microeconomics) question.

Detailed steps are required.

Thanks!

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There are N tourists uniformly distributed along Orchard Road, which is 1km long. Each of these tourists must find a restaurant to have lunch. The number of tourists is large and we can treat demand as continuous. Tourists have transportation cost t = $2 per km distance travelled. Restaurant A is located at the west end of Orchard Road while Restaurant B is located at the east end of Orchard Road. On top of the difference in locations, these two restaurants are also different in terms of the following characteristics: 0 Restaurant A: Average review rating 2 4 stars, Cleanliness score = 5 0 Restaurant B: Average review rating 2 2 stars, Cleanliness score = 10 Let the price of lunch be 19A and 193. Let the marginal cost for each unit of lunch be $2 for both restaurants, and there are no fixed costs. A research rm has found that all consumers have a baseline willingness to pay for lunch at $15. In addition, they are willing to pay $2 for each star in the review rating and $1 for each unit of cleanliness score. Each tourist will have lunch at the restaurant with the highest \"net utility\" (total willingness to pay price of lunch total transportation cost). a. (1 mark) Consider a consumer located xi km away from the west end of the road and 1 xi km away from the east end of the read. What is the net utility the consumer gets from having lunch at restaurant A? How about having lunch at restaurant B? b. (0.5 mark) Write down the demand functions faced by restaurants A and B. c. (1.5 mark) Suppose both restaurants set their prices simultaneously, calculate the equilibrium prices and prots for each restaurant. d. (0.5 mark) Suppose restaurants set price sequentially: Stage 1 restaurant A sets and commits to pA; Stage 2 , restaurant B sets p3 after observing pA. Calculate the equilibrium prices and prots for each restaurant using backward induction

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