Question 12.49

image 21. Because the distribution in Exercise 20 is symmetrical, the median and equilibrium position is for the stores to locate at the center. Indeed, similar stores frequently cluster near the center of many main streets, although these stores may not be particularly convenient to people who live far from the city’s center. The centralized location does not seem to be in the public interest. Wouldn’t it be better if some of the same kinds of stores were near one end of the main street and some near the other? It has been argued that the “social optimum” for the location of the two stores in Exercise 20 should be 2.5 and 7.5, because then no shopper has to travel more than 2.5 from their ideal point. Would the stores still split the shoppers? Explain.

21.

Yes, because shoppers to the left of 5 would go to the store at 2.5, and shoppers to the right of 5 would go to the store at 7.5. The shoppers at 5 are equidistant between the stores; 50 could go to one and 50 to the other.