The Hull Petroleum Company and Inverted V are retail gasoline franchises that co

Question

The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other's marquees. Demand for gasoline in this market is Q-90-12P and both franchises obtain gasoline from their supplier at $3.60 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V's price, and the owner of Inverted V lowered its advertised price to beat Hull's price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Instructions: Enter your responses rounded to the nearest two decimal places. Gallons sold: Price: $ How would prices differ if Hull had service attendants available to fill consumers' tanks but Inverted V was only a self-service station? Price will not change Price will go down Price will go up

Explanation / Answer

Quantity: 30

Price: $5

Price will go up since Hull has employed service attendants to fill consumers' tanks so it would obviously raise its price in order to overcome its additional cost.

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