Question

Consider a city with two supermarkets, Frye S&S and Urban Food Shop.

Initially the distance between the markets is five miles. Urban Food Shop submits a

rezoning request to the city council to relocate to a site adjacent to Frye S&S.

a) What is the economic reasoning why Urban Food Shop would want to move near the

Frye S&S?

b) Would the residents in this city be better or worse off if the move is approved? Explain your reasoning.

Answer 1

a). Urban Food Shop would want to move near the Frye S&S because it wants to increase its sales. It is rezoning so tha customers of Frye S&S can also visit Urban food shop and but goods from it. In order to attract customer of Frye S&S, urban food shops thinks that moving close to it will result in increase in customer foot fall and will increase profits.

b). Residents in the city will be worse off because residents of the area from which urban food shop is shifting will have to walk five miles in order to buy goods of basic necessities. However residents in the area where both the supermarket will be operating is better off because they will get more varieties and options to choose from.