Yogi’s Bar and Grill is frequented by unsociable types who hate crowds. If Yogi’s regular customers expect that the crowd at Yogi’s will be X, then the number of people who show up at Yogi’s, Y , will be the larger of the two numbers, 120−2X and 0. Thus Y = max{120−2X, 0}.
(a) Solve for the equilibrium attendance at Yogi’s. Draw a diagram depicting this equilibrium on the axes below.
(b) Suppose that people expect the number of customers on any given night to be the same as the number on the previous night. Suppose that _______ customers show up at Yogi’s on the first day of business. How many will show up on the second day? _______. The third day? _______. The fourth day? _______. The fifth day? _______. The sixth day? _______. The ninety-ninth day? _______. The hundredth day? _______.
(c) What would you say is wrong with this model if at least some of Yogi’s customers have memory spans of more than a day or two? _______.