Assume That Total Demand in a Market Is 1 and That

Multiple Choice

Assume that total demand in a market is 1 and that customers are uniformly spread across the line segment from 0 to 1.There are only two companies in the market and there is no cost or service advantage held be either Firm 1 or Firm 2.Firm 1 locates at point a,and Firm 2 locates at point 1-b as shown in the figure.A customer chooses one firm or the other solely on the basis of distance travelled.

-The demand at Firm 1 is given by

A) a + $\frac { 1 + b - a } { 2 }$
B) a + $\frac { 1 - b - a } { 2 }$
C) a - $\frac { 1 + b - a } { 2 }$
D) a - $\frac { 1 - b + a } { 2 }$