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 four sellers of gasoline in Mauston and if they collude, then which of the following outcomes is most likely?
A)Each seller will sell 62.5 gallons and charge a price of $1.25.
B)Each seller will sell 62.5 gallons and charge a price of $5.
C)Each seller will sell 100 gallons and charge a price of $2.
D)Each seller will sell 250 gallons and charge a price of $0.

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 four sellers of gasoline in Mauston and if they collude, then which of the following outcomes is most likely?
A)Each seller will sell 62.5 gallons and charge a price of $1.25. 
B)Each seller will sell 62.5 gallons and charge a price of $5. 
C)Each seller will sell 100 gallons and charge a price of $2. 
D)Each seller will sell 250 gallons and charge a price of $0.

Quizplus · Accepted Answer

If the sellers collude, they will act like a monopoly, maximizing their joint profits by reducing output and raising prices. Charging a higher price of $5 while selling fewer gallons is consistent with this behavior.

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