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Firm A manufactures velvet hats and agrees to sell them through two Baltimore retail stores at a wholesale price of $10, making a profit of

Firm A manufactures velvet hats and agrees to sell them through two Baltimore retail stores at a wholesale price of $10, making a profit of $6 on each hat. Demand for these hats is Q=30-p. Retailers compete in a Bertrand game.

(a) Is the $10 wholesale price the optimal wholesale price for the manufacturer? If not, what is the optimal wholesale price?

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