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Exhibit 6-3
PharmaCo wants to determine how to deploy sales representatives across its Western U.S. region to support a new drug for obesity. Sales representatives will be located in a "home city", which they serve, in addition to cities with feasible commuting distance, with the objective that all cities must be served by at least one sales representative. The feasible connections between each city in the region are listed below (1 indicates a feasible connection):
-Refer to Exhibit 6-3.Suppose PharmaCo wants to have a backup for each city.What is the minimum number of representatives that can cover this region in that case
What are their home cities
Producer Surplus
The difference between the amount producers are willing and able to supply a good for and the actual amount received by them when the good is sold.
Consumer Surplus
The variance between the price consumers are ready to offer for a good or service and the price they actually incur.
Price Ceiling
A government-imposed limit on how high the price of a product can be charged in the market to protect consumers from high prices.
Consumer Surplus
The gap between the amount consumers are prepared to spend on a product or service and the amount they end up paying.
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