There are two gas stations in a small town on an interstate highway. The next closest gas station is 20 miles either way. One of the gas stations lowers its price to 15 cents below the other station.

one competitor has lowered their price. Assume you are a business consultant and that you have been consulted by the competition on what would be the best reaction to the price decrease. What should they do and why? Your recommendation should discuss the competitive situation and justify your recommendation.