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Figure: The Market for Gas Stations
-(Figure: The Market for Gas Stations) The figure 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 shown here were to raise its price above the profit-maximizing price, the outcome would be _____ in total revenue.
A) a reduction
B) an increase
C) no change
D) Not enough information is given to answer the question.

Question

Use the following to answer questions:
Figure: The Market for Gas Stations 
-(Figure: The Market for Gas Stations) The figure 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 shown here were to raise its price above the profit-maximizing price, the outcome would be _____ in total revenue.
A) a reduction 
B) an increase 
C) no change 
D) Not enough information is given to answer the question.

Quizplus · Accepted Answer

In a market with many firms and differentiated products, raising the price above the profit-maximizing level typically leads to a reduction in total revenue as consumers switch to competitors.

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