for both firms in Cournot-Nash equilibrium. b.What would be the equilibrium quantity if Texas Air had constant marginal and average costs of $25,and American had constan marginal and average costs of $40? By solving for the reaction functions under this new cost structure,we find that profit for Texas Air is equal to 元1=1008-Q-Q,Q2-25Q1=7521-Q-QQ2 The change in profit with respect to Q is aQ =75-2Q-Q2 Set the derivative to zero,and solving for in terms ofQ Q1=37.5.0.5Q. This is Texas Air's reaction function.Since American has the same cost structure as in 8.a.American's reaction function is the same as before: 22=30.0.5Q1 To determine substitute for Q in the reaction function for Texas Air and solve for Q: Q1=37.5-(0.5)30.0.5Q1)=30. Texas Air finds it profitable to increase output in response to a decline inits cost structure. To determine 2.substitute for Q in the reaction function for American: 02=30.(0.5)37.5.0.5Q2)=15. American has cut back slightly in its output in response to the increase inoutput by Texas Air.for both firms in Cournot-Nash equilibrium. b.What would be the equilibrium quantity if Texas Air had constant marginal and average costs of $25, and American had constant marginal and average costs of $40? By solving for the reaction functions under this new cost structure, we find that profit for Texas Air is equal to  1 1 1 2 1 2 1 1 1 2 1 2 =100Q −Q −Q Q − 25Q = 75Q −Q −Q Q . The change in profit with respect to Q1 is   = − −  1 1 1 2 75 2 Q Q Q . Set the derivative to zero, and solving for Q1 in terms of Q2, Q1 = 37.5 - 0.5Q2. This is Texas Air’s reaction function. Since American has the same cost structure as in 8.a., American’s reaction function is the same as before: Q2 = 30 - 0.5Q1. To determine Q1, substitute for Q2 in the reaction function for Texas Air and solve for Q1: Q1 = 37.5 - (0.5)(30 - 0.5Q1) = 30. Texas Air finds it profitable to increase output in response to a decline in its cost structure. To determine Q2, substitute for Q1 in the reaction function for American: Q2 = 30 - (0.5)(37.5 - 0.5Q2) = 15. American has cut back slightly in its output in response to the increase in output by Texas Air