Essay
Hale's One Stop and Auto Service competes with Murray's Gas Mart.The local demand is:
QD = 25 - 10P P = 2.50 - 0.01QD.
Both firms sell exactly the same quality of gasoline.Thus,if the firms charge a different price,the lower price firm will capture the entire market share.If the firms charge the same price,they will split the market share.The marginal cost functions are both constant at $1.25.If the firms compete by setting price,what is the market output level? What is the market price level?
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