Suppose That a Bus Company Is Deciding Where to Locate

question 65

Essay

Suppose that a bus company is deciding where to locate its central hub.There are 6 possible destinations for the buses.Suppose that the center of town will be used as the reference for describing the possible destinations.A is located 5 miles South and 3 miles West.B is located 3 miles North and 2 miles East.C is located 1 mile South and 5 miles East.D is located 2 miles North and 3 miles West.E is located exactly in the center of town.F is located 10 miles North and 5 miles East.Assume that traffic to each destination will be equal.Where should the hub go so that travel time is minimized?

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Definitions:

Upstream Firms

Companies involved in the initial stages of production or service provision, typically involving the extraction or production of raw materials.

Market Power

The ability of a company to influence or control prices and market conditions within an industry due to its size or market share.

Vertical Relationships

Connections between companies or entities at different stages of the production process, often involving suppliers and buyers.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices to different buyers.