Two gas stations stand on opposite sides of the road: Rutter's Farm Store and Sheetz gas station. Rutter's doesn't even have to look across the highway to know when Sheetz changes its price for a gallon of gas. When Sheetz raises the price, Rutter's pumps are busy. When Sheetz lowers prices, there's not a car in sight. Both gas stations survive but each has no control over the price.

QUESTIONS:

a. Describe the elasticity of demand that each of these gas station faces.

b. Draw graph to show the short run effect on Rutter's Normal profit

c. Why does each of these gas stations have so little control over the price of the gasoline they sell?