Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q1=403P1+P2

Firm 2: Q2=403P2+P1

Both firms have constant marginal costs of

$2.80

per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities In equilibrium, each firm will charge a price of $9.68 and produce 20.64 units of output.

Question:

Each firm will earn a profit of ?

(Enter your response rounded to two decimal places.)