True/False: Consider a standard Hotelling beach model, where consumers are scattered along a one mile beach. These consumers have perfectly inelastic demand as well as positive linear transportation costs. Firms set their location, but price is fixed by the government. The Nash equilibrium location choices will be different from choices that maximize total surplus.

Answer:
True. Nash equilibrium strategy is for both firms to locate at the center of the road (1/2 mile point). The socially optimal strategy, which maximizes total surplus, is for one firm to locate at the 1/4 mile point and for another to locate at the 3/4 mile point.