Subsidy reduces the marginal cost from 147 - 78 = $69 Profit functions are TA = (339 - 1qA - 1qU)qA - 60qA and TU = (339 - 1qA - qu)qu - 120qu Profits are maximized when It'(A) = 0 and It'(U) = 0 339 - 2qA - qu - 69 = 0 and 339 - 2qu - qA -69 = 0 qA = 135 - 0.5qu and qu = 135 - 0.5qA Solve them to get qu = 135 - 0.5*(135 - 0.5qu) qu = 67.50 + 0.25qu qu = 90 and qA = 90 Hence qA = 90 and qu = 90 Price = 339 - 90 - 90 = $159 Quantities are higher and price is lowerWhat is the equilibrium in the airline example in the chapter if both American and United receive a subsidy of $84 per passenger? The demand the duopoly quantity-setting firms face is Q= 339 - p with an inverse demand function of p= 339- 19A - 1qu. where qA is the quantity produced by American, qu is the quantity produced by United, and both firms face a constant marginal cost of $147 per passenger. With a $84 subsidy, the Cournot-Nash equilibrium occurs where qA equals and qu equals . (Enter numeric responses using integers.) Furthermore, the equilibrium occurs at a price of $ . (Round your answer to the nearest penny.) As a result of the subsidy, the equilibrium quantities are and the equilibrium price is lower higher