1.One reason that many cartels are not long-lived is that

A. its members are tempted to cheat

B. they are illegal

C. its members cannot talk to each other

2.There are only two gasoline stations in a small isolated town. If they each set a high price, they each earn $50. If they each set a low price, they each earn $25. If one firm sets a low price while the other sets a high price, the low-price firm earns $70 while the high- price firm earns $10. Which of the following is a Nash equilibrium?

A. Both set a low price

B.Both set a high price

C. One firm sets a low price; the other high

D. All of the above are Nash equilibria

3.There are only two gasoline stations in a small isolated town. If they each set a high price, they each earn $50. If they each set a low price, they each earn $25. If one firm sets a low price while the other sets a high price, the low-price firm earns $70 while the high- price firm earns $10. If the two firms set price independently and simultaneously, and the decision is just made once, what outcome will result?

A. Both will set a high price

B. Both will set a low price.

C. One firm sets a high price; the other sets a low price.

D. There is not enough information to tell.