3.4 In 2008, cruise ship lines announced they were increasing prices from $7 to $9 per person per day because of increased fuel costs. According to one analyst, fuel costs for Carnival Corporation’s 84-ship fleet jumped $900 million to $2 billion in 2008 and its cost per passenger per day jumped from $10 to $33. Assuming that these firms are oligopolistic and the outcome is a Nash-Cournot equilibrium, why did prices rise less than in proportion Exercises 547 to per-passenger-per-day cost? (Hint: Suppose that duopoly firms face a linear inverse market demand function p = a - bQ and their marginal costs are m, solve for the equilibrium price, then show how the equilibrium price changes as m changes.) M