Figure: The Market for Gas Stations (Figure: The Market for Gas Stations) Look at the figure The Market for Gas Stations.This market is characterized by many firms, differentiated products, easy entry, and easy exit.In long-run equilibrium, the economic profit earned by the typical gas station in the community will be:

Question

Figure: The Market for Gas Stations   (Figure: The Market for Gas Stations) Look at the figure The Market for Gas Stations.This market is characterized by many firms, differentiated products, easy entry, and easy exit.In long-run equilibrium, the economic profit earned by the typical gas station in the community will be:

Quizplus · Accepted Answer

In a market with easy entry and exit, any positive economic profit earned by a firm in the short run will attract new firms to enter the market, causing the supply of gas stations to increase and the price to decrease. This process will continue until the economic profit for each firm is zero in the long run. Therefore, the typical gas station in the community will earn zero economic profit in long-run equilibrium, as shown by the intersection of the demand and the long-run supply curves in the figure.

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