Assume that two firms produce a good that is identical in allrespects except for one linear dimensio

Assume that two firms produce a good that is identical in allrespects except for one linear dimension, which is the location ofwhere the good is sold. Assume that 100 identical consumers arelocated uniformly between the left end (0) and the right end (1).Firm A is located at 0 and firm B is located at 1. Neither firm canchange its location. Each consumer buys one and only one unit ofthe good and has the utility function Ui = 400 –2PA – tXi when buying from firm A andUi = 200 – 2PB – t(1 – Xi) whenbuying from firm 2. t is the round-trip cost per unit of buying thegood from firm B if the consumer is located at X equal to 0. Assumethat t equals 10 in this case. Marginal and average cost equal 2for both firms. Assume that the firms compete only on price. FirmsA and B choose their prices simultaneously. Determine firm A’sprofit-maximizing price. Show all your work. . . .

 
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