Question 1)You sell a single product in two geographical locations (location 1 and location 2). The locations each face different demand functions so you would like to charge a different price at each location. In location 1, the demand function is 2,000-100*p1 and in location 2 the demand function is 3,000-50*p2. The product has a marginal cost of $1. You have set up and solved an optimization model to maximize total contribution (revenue minus cost) and found that the optimal prices are $10.50 in location 1 and $30.50 in location 2 for a total contribution of $52,537.50.

a)What is demand in location 1?

b)What is demand in location 2?

c)An entrepreneur has determined that she can purchase the product inlocation1.Transportingthe product from location1 to location2will cost$10per item.She has decided to buy fromlocation1,transportto location2and resell the items for$30.49.What will be the NET IMPACT on the original seller's total contribution?(By net impact,I mean,consider that the entrepreneur will buy from location1and sell inlocation 2 - how much will this DECREASE the original seller's overall contribution by?)

d)What can you add to your optimizationmodel in order to eliminate the entrepreneur? Be as specific as possible.

e)How will the change you proposed in part d impact p1, p2 and the relationship between them?