Consider the market for gasoline in a moderately large city. All else constant, it would be reasonable to conclude that the price elasticity demand for any individual gas station would be higher than the price elasticity of demand for gas in general.

Question

Quizplus · Accepted Answer

The price elasticity of demand for an individual gas station is higher because consumers can easily switch to other stations if prices rise, whereas the overall demand for gasoline is less elastic as it is a necessary good with fewer substitutes.

Consider the Market for Gasoline in a Moderately Large City