In what type of market do these gas stations operate? What determines the price of gasoline and the marginal revenue from gasoline?
What will be an ideal response?
These stations operate in a perfectly competitive market. The equilibrium price is determined at the equilibrium between the market demand and the market supply. The marginal revenue from a gallon of gasoline equals the market price of a gallon.
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A common theme in the discussions of the airline, soft drink, doughnut, and express delivery industries is that oligopolistic firms tend to compete:
A) strictly on the basis of price and nothing else. B) strictly on the basis of cost minimization. C) primarily on the basis of product differentiation and price. D) primarily by erecting barriers into the market.
Which of the following would most likely not cause market demand for a normal good to decline?
a. An increase in the price of a substitute. b. An increase in the price of a complement. c. A decline in consumer income. d. Consumer expectations that the good will go on sale in the near future. e. An announcement by the Surgeon General that the product contributes to premature death.death.