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  1. business
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  3. two gas stations a and b sell the same type of gas

Two Gas stations A and B sell the same type of gasoline. They have two...

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Finance

Two Gas stations A and B sell the same type of gasoline. They have two options about charging prices for their gas, either charge a high price or charge a low price. If they decide to cooperate and charge a high price they would both earn $500. But if they cooperate and charge a low price they would both earn $200. They can also compete on prices and can charge either a high price or a low price. If one person charges a higher price and the other person charges a low price, the person charging a high price will not be able to sell anything and will earn $0 and the other person will capture the entire market and will earn $1000. Table below represents the choices available to A and B. a) What is the best choice for A if that business is sure that B will cooperate? b) If they compete what will be the outcome and explain why? Table B Low High Low ($200, $200) ($1000, $0)A High ($0, $1000) ($500, $500) Note: The first number in the set is the As earning and the second number is Bs earning.

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