445 Ch 7 - Product Variety and Quality under Monopoly 00:14 When a firm offers a variety of product in response to different consumer tastes it is

Product Variety and Quality under Monopoly 00:14 When a firm offers a variety of product in response to different consumer tastes, it is called horizontal product differentiation When a first responds to differing consumer willingness to pay for a product’s quality by offering different qualities of the same product is called vertical product differentiation. 7.1 A Spatial Approach to Horizontal Product Differentiation When a product sold differs in the distance traveled by the consumers, this is an example of horizontal product differentiation. 7.2 Monopoly and Horizontal Differentiation transportation costs are is ( t) per unit of distance travel. We assume that in each period each consumer is willing to buy exactly one unit of the product sold by the monopolist provided that the price paid, including transportation costs, (Full Price)