There are economies of scale in ranching, especially with regard to fencing land. suppose that barbed-wire fencing costs $21,000 per mile to set up. a. how much would it cost to fence a single property whose area is one square mile if that property also happens to be perfectly square, with sides that are each one mile long?
b. how much would it cost to fence exactly four such properties, which together would contain four square miles of area?
c. now, consider how much it would cost to fence in four square miles of ranch land if, instead, it comes as a single large square that is two miles long on each side.
d. which is more costly—fencing in the four, one-square-mile properties or the single four-square-mile property?

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?