Title | Review Questions |
---|---|
Course | Developments in Microeconomics |
Institution | Loughborough University |
Pages | 6 |
File Size | 93.2 KB |
File Type | |
Total Downloads | 101 |
Total Views | 180 |
Review Questions...
MCQ’s 1-4 refer to the following information: Consider a monopolist with an exogenous quality, s, which is private information. The monopolist can either have a low-quality or a high-quality product with positive probability. A low-quality product, s=0, has a marginal cost equal to 0. A high-quality product, s=1, has a marginal cost equal to 1. A single consumer gains u = 4s – p if she buys a product of quality s at a price of p, and zero if not. Suppose the game is repeated over two periods where the firm’s realised quality remains fixed over the two periods, and where the firm has a discount factor equal to one. 1. What is the correct condition to ensure that the high-quality type is willing to spend A on advertising within a separating equilibrium? A. 6-A>0. B. 6-2A>0. C. 3-A>0. D. 3-2A>0. E. 3-A...