Why does each of these gas stations have so little control over the price of the gasoline they sell?
What will be an ideal response?
These stations face a large amount of competition, not only from each other but also from all nearby gas stations. If a firm raises its price it loses a vast number of customers so each firm is severely limited in raising its price. And there is no need for a firm to lower its price much below the going price because the firm can already increase its sales drastically with only a slight lowering of its price.
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A contestable market is similar to a perfectly competitive market in that there
A) are barriers to entry. B) are no barriers to entry. C) can be only one firm in the market. D) will be no entry if the existing firm earns an economic profit.
Passive macroeconomic policy would rely on natural market forces and automatic stabilizers to close an expansionary gap
a. True b. False Indicate whether the statement is true or false