B. Consider the optimization problem faced by a homeowner who is moving and is determining an asking price for his home. Such a homeowner faces the following trade-off: A higher asking price p means a lower probability of selling the home, but it also means greater utility for the homeowner if the home sells. Suppose that the probability of a sale is given by d1p2 5 1 2 0.00001p. Suppose further that p0 5 $100,000 was the price at which the homeowner had originally bought the home, and his utility from not selling the home is u 5 110,000 2 ap0 2. His utility of selling the home depends on the price p and is given by u1p, p0 2 5 1p 2 ap0 2 when p $ p0 and y1p, p0 2 5 b1p 2 ap0 2 when p , p0

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