Demand and supply, Business Economics

Assignment Help:

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.


Related Discussions:- Demand and supply

Explanation of privatisation, Problem 1 Discuss Privatisation in USA wi...

Problem 1 Discuss Privatisation in USA with some examples. Explanation of privatisation Advantages Disadvantages Problem 2 Discuss the basic differe

Why are markets considered as unsuitable for promoting, Why are markets con...

Why are markets considered as unsuitable for promoting development? The process of establishing a market system frequently includes radical reform which produces both winners

What do you mean by the term earned value analyses, What do you mean by the...

What do you mean by the term earned value analyses?  What are additional insights into the dynamics of a project afforded via the use of EVA? Earned value implies, in effect, t

How does resource enhancement improve development, How does resource enhanc...

How does resource enhancement improve development? Enhancements in the quantity and quality of resources increases productivity hence incomes. Enhanced management raises outpu

Macroeconomic, Question 1 (9 marks) During the 1990s, technological advan...

Question 1 (9 marks) During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets a

Unemployment rate, In 2007, Segolene Royal, in an unsuccessful bid for pres...

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

Cost of production of a firm in the long run, Question 1: (a) Explain,...

Question 1: (a) Explain, giving examples, the law of diminishing returns, clearly bringing out the relationship between cost curves and product curves in the short run. (

Can less developed countries grow by secondary sector, Can economies grow o...

Can economies grow of less developed countries by developing its secondary sector? Economies grow of less developed countries by developing its secondary sector because manufac

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd