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3. Two rms produce homogeneous products and each rm can produce a quantity be tween 0 and 1000. There are 1000 potential buyers. Each of these buyers demands one unit of the rms1 output3 and has a reservation price of reservation price of $200 (that is, they buy one unit if and only if the price is $200 or lower). 30 both rms have enough capacity to supply the entire market. These two rms simultaneously choose prices and buyers buy at the cheaper price (if the price is $200 or lower). If the prices are the same, buyers choose a rm with equal probability. (a) Suppose both rms' unit cost of production is $100. Assume the price can only be in whole dollar amount. Explain that both charging $101 is a Nash equilibrium. (10 pts) (b) Suppose both rms' unit cost of production is $100. Assume the price can be any positive real number. Explain that both rms charging a price of $100 is a Nash equilibrium (10 pts) and that there is no other pure-strategy Nash equilibrium (10 pts)