There are two gas stations in a small isolated town. The market demand for gasoline is given by P=8-0.25-Q, where Q is the quantity of gas in thousands of gallons and Pis the price of gas in dollars per gallon. Each station can supply any quantity of gasoline at a constant marginal cost of $1 per gallon. There are no fixed costs. Both stations sell the same regular gas, and the differences in location, service, etc. don't matter to consumers.

There are two gas stations in a small isolated town. The market demand for gasoline is given by P=8-0.25-Q, where Q is the quantity of gas in thousands of gallons and Pis the price of gas in dollars per gallon. Each station can supply any quantity of gasoline at a constant marginal cost of $1 per gallon. There are no fixed costs. Both stations sell the same regular gas, and the differences in location, service, etc. don't matter to consumers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

There are two gas stations in a small isolated town. The market demand for gasoline is given by P=8-0.25xQ, where Q is the
quantity of gas in thousands of gallons and Pis the price of gas in dollars per gallon. Each station can supply any quantity of
gasoline at a constant marginal cost of $1 per gallon. There are no fixed costs. Both stations sell the same regular gas, and the
differences in location, service, etc. don't matter to consumers.

Suppose one of the gas stations cheats and sells 2,000 gallons of gas more than its quota set by the
agreement. Then, the price of gas will be $
Type your answer here
will be $
Type your answer here
be $ Type your answer here
per gallon, the cheater's profit
and the profit of the station that adheres to the agreement will

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