Two clothing firms, LL Nut and LL Bean, sell identical rain coats.

Q7 (3 marks) Two clothing firms, LL Nut and LL Bean, sell identical rain coats. The cost of producing a coat is $100. Since the coats are perfect substitutes, consumers will choose the seller that offers a lower price. For simplicity, each rm can set three different prices: $103, $102, or $101. Market demand is 100 coats at$103, 110 coats at $102, and 120 coats at $101. Ifhoth rms offer the same price, each firm receives half of consumers. a (2 marks). Write down the normal form of this game. That is, ll out the payoff in the following normal form. LL Beans $103 $102 $101 $103 LL Nut $102 $101 b (1 mark). If both rms move simultaneously, what is the pure strategy Nash equilibrium? Suppose LL Beans decides to announce the price early in summer, ahead of LL Nut. Can this strategy be successful? Why or Why not