There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 4,500 – 4q.

There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p = 4,500 – 4q. Each firm has one manufacturing plant and each firm i has a cost function C(qi) = q2i, where qi is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if
 
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