(1) Suppose a store is located in the middle of Main Street, which is one mile long.Marginal transportation cost is given by t=$80 per mile round trip. The averageproduction cost of the product sold is given by c=$32. Customers value each unit of ourstore’s product at V=$50.(a) If the firm wants to sell to only 25% of all people on Main Street, what will itsprice be? Is this doable?(b) Now assume it wants to sell to 50% of the people, what will its price be? Is thisdoable?(2) (unrelated to question (1). Assuming a firm wants to cover half of the market (assumethe length of the market is normalized at a value of one), what is this firm’s profitfunction (provide an abstract equation).
a)Mathematical expression of demand curve = Meaning the quantity demandedis a function deping on priceprices of other goods (complimentaries or subsidies) (Py) consumer level of income (M) and…
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