Question

acofino Restaurantsis a local company with a commissary on Hastings St, several food bars around Vancouver, and several food trucks that serve West Coast and Mexican inspired fare. Suppose the company has just been awarded an exclusive permit to serve their foodstuff along 500 metres stretch of Beach Ave during Vancouver’s Celebration of Lightfireworks. On any given night during the firework show Tacofino expects that up to 10,000 visitors may want to buy their “bahn tofu” tacos that they intend to sell from the food trucks. They think that the Hotelling spatial model is a good framework to make theirbusiness decision, and here are their estimates: the taco’s reservation price is $9, a customer’s cost of traveling along crowded Beach Ave is $8/km, and a truck costs $250 to rent for one night. The cost of making tacos is flat ¢90 per taco. 4. How many trucks will Tacofino put in the street on the night of Celebration of Light? 5. What is the profit-maximizing price ($ per taco)? 6. What profit will Tacofino expect to make ($ per night)? 7. What would be the efficient number of trucks(maximizing social surplus)

Answer 1

GIVEN INFORMATION :-

Tacofino expects = 10,000

Foodstuff =500 metres

Reservation price =  9

Cost of traveling = 8/kM

Truck costs = 250

Cost of making tacos = 90 per taco.

REQUIRED:-

4. How many trucks will Tacofino put in the street on the night of Celebration of Light?

5. What is the profit-maximizing price ($ per taco)?

6. What profit will Tacofino expect to make ($ per night)?

7. What would be the efficient number of trucks(maximizing social surplus)?

SOLUTION:-

4:-Tacofino put in the street on the night of Celebration of Light :

The Organization will hope to cover as much as clients they can so they will 20 trucks in the road with remove at 500 meters as allowed to them . they can ascertain the proportion by add up to number of clients with separate between trucks allowed

add up to trucks = 10000/500

= 20 trucks.

one truck for every five hundred clients as clients will purchase from their closest truck as there voyaging cost their closest truck as there voyaging cost is 5 . so they won't go far a taco as it will decrease their utility from a taco.

5:-  The Profit-Maximizing Price:

The benefit - amplifying cost can be 1$ for each taco as the reservation cost for taco is 9$ and the cost acknowledged by the clients is cost of a taco in addition to voyaging cost ($1+$8 =$9) and client won't pay more than $9 for a taco.

6:- Profit will Tacofino expect to make :

Total profit = 4000$

suppose one customer buy one faco so ten thousand consumer will buy ten thousand facos

Cost of 1 faco  

= 90 per cent

so, 10000 faco will be 90000 percentage

which is equal to 9000$ ($1=100 percentage)

Selling cost = 1 faco  

so, 10000 taco = 10000 $ ( total revenue)

TOTAL TRUCKS = 20

Rent of one truck = 250$

Rent for 20 truck = 250 *20

= 5000$

Profit = total revenue - total cost

=10000 -9000 -5000

= 4000$

7:-  Efficient Number of Trucks:-

The proficient number of truck can be 10 trucks implies on truck per thousand clients it will on the off chance that the benefit.