Determine your optimal bargaining strategy (i.e., your optimal first and second offer) by following the steps below: (a) Suppose you design your bargaining strategy such that the retailer may find it optimal to accept either of your offers, depending on consumer demand ("screening"). For which level of consumer demand would you want the retailer to accept your first offer, and for which your second offer? (b) Formulate all participation and incentive compatibility constraints. (c) What is your optimal "screening" bargaining strategy and your expected profit when playing this strategy? (d) Can you do any better using a "non-screening strategy in which the retailer accepts your first offer for sure (independent of consumer demand)?
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- Johnny is "paid" by his parents $2o if he gets a grade A, $10 if he gets a grade B, whereas he has to pay his parents back $5 if he gets a grade other than A or B. On average 20% of the grades he gets are A, and 30% are grades B. What is the expected value of what he "earns" per grade ? What is the expected value of what he "earns" at school weekly if on average he gets five grades a week ? How long should Jim save until he collects enough money to buy a pair of brand new Hi-Fi headphones that cost $225?Ans both Otherwise dont ansHello can any one help with this Economics question: A contractor spends Dollar 3,000 to prepare for a bid on a construction project which, after deducting manufacturing expenses and the cost of bidding, will yield a profit of dollar 25,000 if the bid is won. If the chance of winning the bid is ten per cent, compute his expected profit and state the likely decision on whether to bid or not to bid?
- sc. te Con oa S Payn Comp able for discrete con cto . C Enetor 76 Fiid A Given P (Round to the neare T Find AIP acceptable. O8929 0.7972 07118 0 6355 0.5674 0 5066 0.4523 0,4039 0 3606 10000 21200 O 8929 1.1200 0.5917 1 1.1200 1,0000 0.4717 16901 2 4018 1.2544 0 2963 0.4163 B3744 47798 1.4049 1.5735 1.7623 1.9738 3 30373 0.2092 0.3292 3.6048 4.1114 4.5638 0.2774 6.3528 8 1152 10.0390 12.2997 14 7757 0.1574 0.1232 0.0991 0.2432 6. 0.2191 7 2.2107 0.0813 0.2013 4.9676 5.3282 5.6502 8 2.4760 0.1877 0.1770 0.0677 6. 2.7731 0.3220 17.5487 0.0570 10 3.1058 Print DoneEconomics Shawn's consumption is subject to risk. With probability 0.75 he will enjoy 10000 in consumption, but with probability 0.25 he will have only 3600. His utility function for consumption is given by v(c) = Vc. -What is the expected value of Shawn's consumption? -What is his expected utility? -What is his certainty equivalent of having 10000 with probability 0.75 and 3600 with probability 0.25?2 Scenario Your client, InsureCorp, is an insurance company considering launching an 'income insur- ance' product in the nation of Motherland. Income insurance is a product that fully insures a household against changes in income caused by a major injury or illness. At present, no businesses are selling income insurance products in Motherland. Initial market research suggests that there are 15,000 households in Motherland interested in purchasing income insurance. Your client expects that the fixed cost of launching the income insurance product will be $25,000,000 per year, and that each policy issued to a customer will cost the company an additional $2,000 in sales commissions. 2.1 Your task Your client wants you to analyse the potential market for income insurance and report on the following: What is the maximum price the company can charge a household for an income insurance policy? What is the expected profit (or loss) for the company if it becomes a monopoly provider of income…
- Sam, after taking a $200 loan from the bank to finance an investment that pays $1000 50% of the time and $0 50% of the time at a 100% interest, discovers another riskier investment that pays out $5,000 but only 10% of the time, while the other 90% of the time it pays zero. Would the he want to switch to the riskier investment? Question 4 options: Yes because his return has increased No because his liability to the bank has increased No because his return has decreased None of the aboveYou live in an area that has a possibility of incurring a massive earthquake, so you are considering buyingearthquake insurance on your home at an annual cost of $180. The probability of an earthquake damagingyour home during one year is 0.001. If this happens, you estimate that the cost of the damage (fully coveredby earthquake insurance) will be $160,000. Your total assets (including your home) are worth $250,000.Assume that a customer shops at a local grocery store spending an average of $200 a week, resulting a retailer profit of $10 each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year lifespan. Also assume a 5 percent annual interest rate and no initial cost to acquire the customer. Describe ways marketers can increase the lifetime value of a customer.
- Your friend is contemplating buying a local restaurant. He has assessed the lifetime profits, including resale, to be $11 million with 20% chance, $6 million with 60% chance or $3 million with 20% chance. Knowing the most your friend would pay for the restaurant is $6.4 million, what can you infer about the situation? O A. The expected payoff of the restaurant is $6.333 million, the risk-discount being offered by your friend is $77.000 and your friend is risk averse with respect to this purchase. O B. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $0 and your friend is risk neutral with respect to this purchase. o C. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $200,000 and your friend is risk seeking with respect to this purchase. O D. The expected payoff of the restaurant is $6.333 million, the risk-premium being required by your friend is $333,000 and your friend is risk…15. A city mayor decides to construct a new bridge over the major river in the town. The estimated life of such a structure will be 20 years. There is a 70% probability that the total initial costs (consulting fees and construction) will be $800,000 and a 30% probability that such costs would be $1 million. There is 100% probability that the maintenance costs would be $30,000 every 5 years. How much money should the city borrow now in order to carry out the entire project including maintenance? The interest rate is 5%.17. Suppose a risk-neutral power plant needs 10,000 tons of coal for its operations next month. It is uncertain about the future price of coal. Today it sells for $60 a ton but next month it could be $50 or $70 (with equal probability). How much would the power plant be willing to pay today for an option to buy a ton of coal next month at today's price? (Ignore discounting over the short period of a month.) а. 5 b. 4 с. 3 d. NOTE: I KNOW THAT THE ANSWER IS (A), BUT PLEASE INCLUDE ALL THE STEPS HOW TO SOLVE THE PROBLEM BECAUSE I NEED TO PRACTICE. THANK YOU.