1.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 firm sets a high price, the low-price firm earns $70 while the high-price firm earns $10.

A. There is only one Nash equilibrium

B. There is more than one Nash equilibrium.

C. There is on Nash equilibrium.

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 seta a low price and the other firm sets a high price, the low-price firm earns $70 while the high-price firm earns $10. If they two firms collude, what will they do?

A. They both set high price.

B. They both set low price.

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

D. Not sure what will happen.

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 both set a low price, they each earn $25. If one firm sets a low price and the other sets a high price, the low-price firm earns $70 and the high-price firm earns $10. Does a prisoners' delimma exist?

A. Yes

B. No

C. Not sure