Question
A recent study relied on data from various gasoline stations operating under different brands in different regions within the metropolitan area of Perth, Australia. The
A recent study relied on data from various gasoline stations operating under different brands in different regions within the metropolitan area of Perth, Australia. The demand in each case was estimated taking into account the price of gasoline at the station (own price), the price of gasoline at up to three nearby competing stations, and household income in the area. The table below summarizes estimated elasticities for two gas stations, A and B, each of which has three nearby competing stations.
A B
own price -5.78 -15.77
Station 1 1.19 9.78
Station 2 1.52 5.29
Station 3 1.87 3.81
Income 0.38 0.3
True or False?Gasoline at nearby competitors is a closer substitute for gasoline at Station B than at Station A.
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