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Consider chemical fertilizer market in an isolated village where suppliers are limited to two at most.

Consider chemical fertilizer market in an isolated village where suppliers are limited to two at most. Let q1 and q2 denote the quantities of homogeneous fertilizer produced by firms 1 and 2 respectively. Let P(Q) = 30 – Q be the market-clearing price when the aggregate quantity on the market is Q (= q1 + q2). (More precisely, P(Q) = 30 – Q for Q < 30, and P(Q) = 0 for Q ≥ 30.) Assume that the total cost for firm i (i = 1 and 2) of producing qi is Ci (qi) = 6qi. That is, there are no fixed costs for both firms and the constant marginal cost is common to two firms at 6.
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Consider chemical fertilizer market in an isolated village where suppliers are limited to
two at most. Let q1 and q2 denote the quantities of homogeneous fertilizer produced by
firms 1 and 2...

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