Role in a driver decision as to where to purchase gasoline

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Reference no: EM131563741

Phillips 66 and ARCO gas stations are located at opposite ends of a 15 mile stretch of road in California's Mohave Desert. Each gas station purchases the gasoline that it sells from a local distributor for $1.50 per gallon. On any given day, an average of 660 drivers are uniformly distributed along this stretch of road who purchase an average of 4 gallons of gasoline. The cost of travel for each driver is $0.04 per ¼ mile. (Direction and speed play no role in a driver's decision as to where to purchase gasoline.) Suppose that Phillips 66 lowers the price of its gasoline to $4.50 per gallon, while ARCO continues to charge $5 per gallon. On an average day, ARCO will earn an operating profit on gasoline sales of: Answers: a. $4,620.25. b. $3,665.50. c. $3,360.75. d. $4,840. e. $4,785.

Reference no: EM131563741

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