APA format

A. Grocery stores and gasoline stations in a large city would appear to be examples of competitive markets: There are numerous relatively small sellers, each seller is a pricetaker, and the products are quite similar.

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  • How could we argue that these markets are not competitive?
  • Could each firm face a demand curve that is not perfectly elastic?
  • How profitable do you expect grocery stores and gasoline stations to be in the long run


B. Airline industry experts generally believe that because of the “highly competitive” nature of U.S. airline markets, it is usually impossible to pass on higher jet fuel prices to passengers by raising ticket prices.

  • What factors do you suppose contribute to making U.S. airline markets “highly competitive”?
  • Accepting the premise that U.S. airline markets are indeed highly competitive, analyze in both the short run and long run the difficulty of raising ticket prices when jet fuel prices rise.