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Q.5 Guava makes a high quality product (G) and Doors makes a low quality product (D). Assume that it costs zero to make each type

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Q.5 Guava makes a high quality product (G) and Doors makes a low quality product (D). Assume that it costs zero to make each type of product. Let g be the unit price of G and d be the unit price of D. There are two types of customers - 'shaukeen' and 'kanjus'. Each type of customer is interested in buying at most one unit from either Guava or Doors. 'kanjus' customers do not care about quality, they just care about price. The firm with the lowest price (in the 'kanjus' market) makes sales of 1 - s , where s is the lowest price, to the 'kanjus' market, with sales split equally if both the firms charge the same price. 'shaukeen' customers' demand for Guava's product is given by 1 - g + d and demand for Door's product is given by g - d. Suppose Guava sells only to 'shaukeen' customers while Doors sells to both 'shaukeen' and 'kanjus' customers. Prices are set simultaneously and without collusion. The equilibrium price charged by Doors is

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