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Gary's Gas and Frank's Fuel Are the Only Two Providers

Question 28

Multiple Choice

Gary's Gas and Frank's Fuel are the only two providers of gasoline in their small town.Gary and Frank decide to form a cartel to raise the price of gasoline.The total industry profits are highest when ________, and Gary's profits are highest when _.


A) neither firm cheats on the agreement; neither firm cheats on the agreement
B) neither firm cheats on the agreement; Gary cheats on the agreement and Frank does not cheat
C) both firms cheat on the agreement; Gary cheats on the agreement and Frank does not cheat
D) both Gary and Frank cheat on the agreement; both Gary and Frank cheat on the agreement

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