In the Hotelling Model,what Effect Would an Increase in the Transportation

question 9

Multiple Choice

In the Hotelling model,what effect would an increase in the transportation cost t have on,in the first instance,a monopoly firm and,in the second instance,two firms located at the extremes of the line segment who compete over the marginal consumer?

• A)The monopolist's profit would decrease but the duopolists' would increase.
• B)Both monopolist's and duopolists' profits would increase.
• C)Both monopolist's and duopolists' profits would decrease.
• D)The monopolist's profit would increase but the duopolists' would decrease.

---

Definitions:

Nominal Scale

Refers to a classification system in statistics where data can be divided into non-numeric categories that are labeled or named; there is no intrinsic ordering to the categories.

Mikhail Gorbachev

The last leader of the Soviet Union, known for implementing reforms that contributed to the end of the Cold War.

Power Removal

The act or process of taking away authority and control, typically from someone in a position of power.

Internet Revolution

The significant transformation in society and the economy resulting from the widespread adoption of the internet, greatly affecting communication, commerce, and information access.