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

Question 38

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 _____ cheat(s) on the agreement,and Gary's profits are highest when _____.


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

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