Demand and supply, Business Economics

Star Petroleum and Moonlight Petroleum are retail petrol stations that compete in the local market to sell petrol to consumers. Star and Moonlight are located across the street from one another and can observe the prices posted on each other's price display boards. Demand for petrol in this market is Q = 50 - 10P and both petrol stations obtain petrol from their supplier at $1.25 per litre. On the day that both petrol stations opened for business each owner was observed changing the price of petrol advertised on its display board more than 10 times; the owner of Star Petroleum lowered its price to slightly undercut Moonlight's price, and the owner of Moonlight lowered its price to beat Star's price. Since then, prices appear to have stabilized.

a. Under current conditions, how many litres of petrol are sold in the market, and at what price? Explain.

b. Would your answer differ if Star Petroleum had service attendants available to fill consumers' tanks but Moonlight was only a self-service station? Explain.

Posted Date: 2/21/2013 1:23:05 AM | Location : United States







Related Discussions:- Demand and supply, Assignment Help, Ask Question on Demand and supply, Get Answer, Expert's Help, Demand and supply Discussions

Write discussion on Demand and supply
Your posts are moderated
Related Questions
Describe the terms inflation, deflation, and inflation rate and price stability. Inflation and Deflation: a. An increasing aggregate price level is called as inflation.

The word of Keynesian -styles A Keynesian come about the rules creators on purpose look for to motivate additional than one of the modules of aggregate demand to improvement numbe

Why are many economists opposed to licensure of medical facilities and personnel?

What is Conditionality? Conditionality is the needs imposed onto countries as pre-conditions for loans. Into crisis situations member countries seek assist from the IMF for

Problem 1: (a) Clearly distinguish between the theories of Comparative and Absolute advantage of trade (you are expected to use examples to illustrate your answer). (b) Acco

WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIEW OF THE INDUSTRY LIFE CYCLE

the basic assumption of the static model

In 2007, Segolene Royal, in an unsuccessful bid for president of France, says that employees who lost their jobs would obtain unemployment payments equivalent to 90% of the previou

QUESTION 1 Learning has always been at the centre of improved performance in organisations. Taking an organisation of your choice, discuss how E-learning might be an efficient

Write a book review of a book of your choice (chosen from the list of course reference literature) by either Joseph A. Schumpeter or Israel Kirzner about entrepreneurship and macro