Murphy's Gas Station constantly monitors the price of unleaded gas at Johnson's Gas Station. If Johnson's lowers the price of gas, so will Murphy's. This is an example of
A) network effects.
B) rent-seeking behavior.
C) mutual interdependence.
D) monopoly.

Question

Quizplus · Accepted Answer

This scenario exemplifies mutual interdependence, where the actions of one firm (Johnson's Gas Station) directly influence the actions of another (Murphy's Gas Station), typical of oligopolistic markets where a few firms are highly sensitive to each other's pricing and marketing strategies.

Murphy's Gas Station Constantly Monitors the Price of Unleaded Gas