installed gems

where do installed Gems reside in the instant Rails folder tree?
I noticed that so far each time I have run into an error such as:
"Gem::LoadError: Could not find RubyGem mocha (>= 0)"

I am required to go to the Ruby command line and type "Gem install
mocha"
then Gem update.

Any insight on how this works would be appreciated.

thanks, Joel