Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q)equals=4040q. Assume that the demand curve for the industry is given by Pequals=160160minus−Q and that each firm expects the other to behave as a Cournot competitor. Calculate the Cournot-Nash equilibrium for each firm, assuming that each chooses the output level that maximizes its profits when taking its rival's output as given. What are the profits of each firm? (Round all quantities and dollar amounts to two decimal places.)

Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact thatmr=mc at the optimal quantity for each firm. furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium isless than the minimum average total cost. true or false: this indicates that there is a markup on marginal cost in the market for engines. true false monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. the presence of the externality implies that there is too little entry of new firms in the market.