Questions 6-8 rely on the following prompt: Two street vendors (Vendor X and Ven

Question

Questions 6-8 rely on the following prompt: Two street vendors (Vendor X and Vendor Y) with mobile carts produce a homogenous (identical) good which they sell at identical prices. Customers are located along a linear boardwalk with six locations Location A through Location F), with a different number of customers in each location, as pictured 10 12 2 So, there are 2 customers in location A, 4 in B, 6 in C, etc. There are 42 customers total, Customers will make a purchase from whichever vendor is closest to them, and equally close customers will be sp evenly between Vendor X and Vendor Y. The vendors CAN locate in the same location (so, both could locate in location A). lit

Explanation / Answer

6). The solution is a) because if X settles at say C and Y is at D Total demand will be greater than 12 but less than 20 this is less than demand for Y so he will deviate to D. At (D,E) and (E,D) there will be no deviation

7) Solution is B. From above part 2+4+6+8+X = 22 for deviation to stop. This implies X= 2.

8) solution is c, because this will result in no profitable deviation and stays in equilibrium with each getting maximum demand.

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