Why do gas stations near airports have a higher price markup than gas stations at busy intersections in the city?
A)Gas stations at busy intersections have to contend with more competition than gas stations within the city.
B)Gas stations within the city are less convenient for consumers than gas stations at the airport.
C)Gas stations at airports face a smaller price elasticity of demand than gas stations in the city.
D)Gas stations at airports have higher fixed costs than gas stations in the city.

Question

Quizplus · Accepted Answer

Gas stations at airports face a smaller price elasticity of demand because travelers may have limited options and may be willing to pay higher prices for convenience. Additionally, airports may charge the gas station higher rent or fees, contributing to higher fixed costs. Gas stations within the city may face more competition, giving consumers more options and less willingness to pay higher prices.

Why Do Gas Stations near Airports Have a Higher Price