Question
Suppose there are two firms selling protein bars. Firm one sells AggieBars' with 10 grams of protein and firm 2 sells 'DavisBars' with 20
Suppose there are two firms selling protein bars. Firm one sells AggieBars' with 10 grams of protein and firm 2 sells 'DavisBars' with 20 grams of protein. Consumers are distributed uniformly over their preferences for grams of protein between 10 and 20. Suppose firm 1 sells AggieBars for $2 and firm 2 sells DavisBars for $3 The cost' to consumers of deviating from their optimal amount of protein is $0.20 per gram. a. What protein content does the marginal consumer (consumer who is indifferent between AggieBars and DavisBars) prefer? The equation for finding the marginal consumer (when the range of product attribute values is 10) is: V-Ptxm = V-P2 - t(10 - xm) b. How would the proportion of consumers buying each product change if the cost to deviation from one's optimal amount of protein increased (was greater than $0.20 per gram)?
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