Final answer:
Rutter's Farm Store and Sheetz gas stations likely operate in a perfect competition market, where the price of gasoline is determined by market supply and demand, and their individual control over pricing is non-existent. The price and marginal revenue from gasoline depend on various factors such as crude oil prices and refining costs. Gasoline demand is generally inelastic, but competition between stations can make it more elastic.
Step-by-step explanation:
The gas stations Rutter's Farm Store and Sheetz are operating in a market that seems characteristic of perfect competition. In a perfect competition market structure, there are many sellers and buyers, products are homogeneous, and there are no barriers to entry or exit. In such a market, individual businesses like these gas stations have no control over the price of gasoline, as prices are determined by market supply and demand.
Price of gasoline and marginal revenue are typically governed by market factors such as crude oil prices, refining costs, taxes, and the balance between supply and demand for gasoline. For these gas stations, if the price is set above the equilibrium price, a surplus will accumulate, and competitive pressures will drive the price back down to maintain sales and cover expenses.
The elasticity of demand for gasoline in general is relatively inelastic because it is a necessity for most consumers. They have little choice but to purchase it at the going price, even when prices increase, unless they have access to alternate forms of transportation. However, for a single gas station compared to another across the street, the demand might be more elastic because consumers can quickly choose the station with the lower price.