Figure: The Market for Gas Stations (Figure: The Market for Gas Stations) The figure The Market for Gas Stations shows curves facing a typical gas station in a large town.The market is characterized by many firms, differentiated products, easy entry, and easy exit.If the gas station here is typical of others in the community, then in the long run, we would expect to observe:

Question

Figure: The Market for Gas Stations   (Figure: The Market for Gas Stations) The figure The Market for Gas Stations shows curves facing a typical gas station in a large town.The market is characterized by many firms, differentiated products, easy entry, and easy exit.If the gas station here is typical of others in the community, then in the long run, we would expect to observe:

Quizplus · Accepted Answer

The market for gas stations is characterized by easy entry and exit. Therefore, if the gas station is typical of others in the community, we would expect to see new gas stations entering the market in the long run to compete with existing ones. Option A and D are incorrect as they both imply that there would be a significant change in the number of gas stations in the market which is unlikely given the industry characteristics mentioned in the question. Option C is incorrect as it does not take into account the possibility of new firms entering.

Figure: the Market for Gas Stations (Figure: the Market