with solutions

3. (10 marks) In Changlun. ItiedahI there are two bakers, Abu and Baker. Their bread taste the same and nobody can tell the difference. Abu has constant marginal costs at RM1 per loaf of bread. Baker has constant marginal costs at Rm per loaf. Faced costs are zero for both of them. The inverse demand function for bread in Changlun is pm) = 6 - 0.01 (qt + qs), where q is the total number of loaves sold per day. Find the reaction function for Abu and Baker. What is the Coumot Nash equilibrium number of loaves of bread for each baker