Question: e. Now suppose that the value students attach to grades is different: They would be willing to pay as much as 4c to guarantee their

e. Now suppose that the value students attach to grades is different: They would be willing to pay as much as 4c to guarantee their usual grade and 0.9c more for each level of grade above that.

Suppose further that the cost of telling the truth about yourself is still c but the cost of exaggerating is 0.1c for each level of exaggeration about the truth. How much surplus does each student type get from signaling that he is an A student if A-insurance is priced at 2c?

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