Often, Gas Stations Only a Few Miles Apart Differ in Price

question 151

Multiple Choice

Often, gas stations only a few miles apart differ in price by as much as $0.10 per gallon. The most likely explanation for this kind of price discrimination is that:

• A) consumers in some communities have a more elastic demand for gasoline than do consumers in nearby communities.
• B) gasoline purchased at one station is a perfect substitute for gasoline purchased at a station a few miles away.
• C) the elasticity of demand is the same in each community.
• D) the cost of providing gasoline is the same in each community.