Author Question: Phil's filling station gas station operates on a patch on the highway in a patch where there were no ... (Read 117 times)

future617RT · **on:** Jul 1, 2018

Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by. It enjoyed high profits. After a while, Glen's gas another gas station opened up close by. The profits for the first gas station are likely to decrease because
a. it has to lower prices, since its product is now more price elastic
b. It has to lower prices since its product is now more price inelastic
c. due to the increased availability of substitutes
d. both A&C

Question 2

Is this outcome efficient?
a. Yes because both of them are maximizing their payoffs
b. No, because both of them can do better than their current equilibrium
c. No, because cheating is goodNo, because cheating is good
d. All of the above