The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline toconsumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other'smarquees. Demand for gasoline in this market is Q= 100 -4P, and both franchises obtain gasoline from their supplier at $2.75 pergallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised onits marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V's price, and the owner of Inverted Vlowered its advertised price to beat Hull's price. Since then, prices appear to have stabilized. Under current conditions, how manygallons 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?O Price will go upO Price will not changeO Price will go down

In a Bertrand oligopoly, firms determine prices (not quantity) independently to maximize profits.…

Answered: The Hull Petroleum Company and Inverted…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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= 120 – 5P, and both franchises obtain gasoline from their supplier at $3.00 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 response rounded to the nearest two decimal places. Gallons sold: Price: $ How would prices differ if Hull had service attendants…
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