Question 1 In the Hotelling Linear City model, where will firms tend to locate if price competition is not very intense? cluster close together move far apart increase differentiation of their products wherever they happen to be located initially Question 2 In the Hotelling Linear City Model, how do firms lower transaction cost for their consumers? by moving location closer to their consumer by locating far apart from each other by lowering counter price through product differentiation Question 3 Which of the following is an example of vertical differentiation? organic vs non-organic produce ice cream flavor color of t-shirt coffee vs tea