Table 17-4
The table shows the town of Mauston's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline.
-Refer to Table 17-4. If there are exactly two sellers of gasoline in Mauston and if they collude, then which of the following outcomes is most likely?
A)Each seller will sell 250 gallons and charge a price of $5.
B)Each seller will sell 175 gallons and charge a price of $3.
C)Each seller will sell 125 gallons and charge a price of $2.5.
D)Each seller will sell 125 gallons and charge a price of $5.

Question

Table 17-4
The table shows the town of Mauston's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline. 
-Refer to Table 17-4. If there are exactly two sellers of gasoline in Mauston and if they collude, then which of the following outcomes is most likely?
A)Each seller will sell 250 gallons and charge a price of $5. 
B)Each seller will sell 175 gallons and charge a price of $3. 
C)Each seller will sell 125 gallons and charge a price of $2.5. 
D)Each seller will sell 125 gallons and charge a price of $5.

Quizplus · Accepted Answer

If the two sellers collude, they will act like a monopoly to maximize their joint profits. This typically involves restricting output and charging a higher price, which in this case would be each selling 125 gallons at a price of $5.

Table 17-4 the Table Shows the Town of Mauston's Demand Schedule for Schedule