Please help

Jim would like to make some extra money by selling economics advice. There are many suppliers of economics advice and many potential buyers. However, suppliers of economics advice can either be 'good' or 'mediocre', and buyers cannot verify how good the supplier is before buying. Assume that buyers would be willing to pay $50 for advice from a good supplier, but only $10 for advice from a mediocre supplier. Suppliers can choose whether or not to offer compen sation of 1: dollars in the event that their advice doesn't work out; assume that this offer is legally binding and veriable. Advice from a good supplier doesn't work out 20% of the time, but advice from a mediocre supplier doesn't work out 50% of the time. A supplier's expected prot per unit is the sales price minus the expected cost of compensation if compensation is offered. a) Say that good suppliers offer compensation and mediocre suppliers don't. What would be the expected profit to a good supplier and to a mediocre supplier under this regime? b) At least how big does the amount of compensation k have to be in order for it to be incentive compatible for the mediocre supplier not to offer compensation under the regime in a)? c) What is the largest amount of compensation k such that it is incentive compatible for the good supplier to offer compensation under the regime in a)? (1) Thus write the range of k for which the compensation offer can be a credible signal of quality. Briey explain Why, and What makes something a 'credible signal' in the context of an asymmetric information model