Two vendors, Ms. Bud and Ms. Weiser, operate on a beach. They are required to charge the same price, but they can choose where to locate themselves on the beach. Their customers, sunbathers, do not like to be near each other, so they are spread evenly along the beach. Sunbathers are also averse to walking, so they purchase one can of beer from the vendor closest to them.
Where on the beach will the vendors, seeking large sales, locate themselves?
Hint: If one vendor, say, Ms. Bud, had already chosen her location, where should her rival, Ms. Weiser, place herself? You might find it helpful to draw or sketch a picture of the beach or picture the beach setting in your mind. Who are the customers these two vendors are actually competing for? All the customers on the beach? The ones on their left/right? Only the ones between these two vendor locations?