When one gas station lowers its price a penny, the station on the other corner of the intersection lowers its price, followed by the gas stations on the next block, and so on, until nearly every gas station in town has lowered its prices. This situation illustrates ________.

Question

Quizplus · Accepted Answer

The scenario described in the question shows intense rivalry among competitors, as gas stations are reacting to each other's price changes in order to maintain their market share. This is a classic example of price competition in a highly competitive market.

When One Gas Station Lowers Its Price a Penny, the Station