A manufacturer of flash drives has a profit function = t - - 3q where t...
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A manufacturer of flash drives has a profit function = t - - 3q² where t is the price charged for a flash drive and q² is the cost of producing a drive whose capacity is q gigabytes. A consumer of type has a utility function u = 0q - t, where takes on a value of 12 for H-type consumers, or 10 for L-type consumers. There are 10 consumers of each type. A consumer gets zero utility if she does not buy. Answer the following. If rounding is needed, round to 3 decimal points. For part d) - i), assume information is asymmetric. d) Suppose that the seller continues to offer the capacity-price bundles that maximises his profit under complete information: that is, he offers (â,t₁) and (âH,TH). What is the utility for the type ₁ consumer from buying the (,) bundle? That is, what is u₁(ⵂÎH)? e) What is the utility for the type consumer from buying the (₁) bundle? That is, what is UH (L, ÎL)? f) What are the seller's profits if he offers the bundles (9,7₁) and (ⵂε) when information is asymmetric? L' H Now suppose the seller decides to offer a menu of capacity-price bundles (q1,t₁) and (qH, tH) to incentives the two types of consumers to sort themselves out. Answer part g) to i) in this context. g) For H-type consumer, what is the optimal (profit maximising) level of Ян ? h) Suppose (q,t) is the optimal (profit maximising) capacity-price bundle for L-type consumer under asymmetric information. What is the value of t? i) What is the seller's overall profit under asymmetric information if the seller offers a menu of profit maximizing capacity-price bundles (q₁,t₁) and (q, t) to consumers? A manufacturer of flash drives has a profit function = t - - 3q² where t is the price charged for a flash drive and q² is the cost of producing a drive whose capacity is q gigabytes. A consumer of type has a utility function u = 0q - t, where takes on a value of 12 for H-type consumers, or 10 for L-type consumers. There are 10 consumers of each type. A consumer gets zero utility if she does not buy. Answer the following. If rounding is needed, round to 3 decimal points. For part d) - i), assume information is asymmetric. d) Suppose that the seller continues to offer the capacity-price bundles that maximises his profit under complete information: that is, he offers (â,t₁) and (âH,TH). What is the utility for the type ₁ consumer from buying the (,) bundle? That is, what is u₁(ⵂÎH)? e) What is the utility for the type consumer from buying the (₁) bundle? That is, what is UH (L, ÎL)? f) What are the seller's profits if he offers the bundles (9,7₁) and (ⵂε) when information is asymmetric? L' H Now suppose the seller decides to offer a menu of capacity-price bundles (q1,t₁) and (qH, tH) to incentives the two types of consumers to sort themselves out. Answer part g) to i) in this context. g) For H-type consumer, what is the optimal (profit maximising) level of Ян ? h) Suppose (q,t) is the optimal (profit maximising) capacity-price bundle for L-type consumer under asymmetric information. What is the value of t? i) What is the seller's overall profit under asymmetric information if the seller offers a menu of profit maximizing capacity-price bundles (q₁,t₁) and (q, t) to consumers?
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d Suppose that the seller continues to offer the capacityprice bundles that maximises his profit under complete information that is he offers 41 and 47 What is the utility for the type 1 consumer from ... View the full answer
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