1,000 sunbathers evenly spread along the beach and that each sunbather will buy one crepe per day provided that the price plus any disutility cost does not exceed $5. Each sunbather incurs a disutility cost of getting up from resting to get a crepe and returning to their beach spot of 25 cents for every 14 mile the sunbather has to walk to get to the CC stall. Each crepe costs $0.50 to make and CC incurs a $40 overhead cost per day to operate a stall. How many franchises should CC award given that it determines the prices the stall holders can charge and that it will have a profit-sharing royalty scheme with the stall holders? What will be the price of a crepe at each stall?
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