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a) Given the bonus b, the salesperson's best response function is b) Suppose the dealership pays b = 5. Then the expected number of cars sold will be E(Q) *Select Answer*

a) Given the bonus b, the salesperson's best response function is b) Suppose the dealership pays b = 5. Then the expected number of cars sold will be E(Q) *Select Answer*

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 30E
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QUESTION 6 A salesperson is trying to sell cars. The number of cars that she will sell depends on her effort "e" and her luck. Given her effort e, with probability 4e she is able to sell four cars, and with probability (1 - 4e) she is able to sell only one car. Her personal cost of effort is 200e². The dealership pays her a bonus b for each car sold. The salesperson is risk-neutral, and wants to maximize her expected utility, which is her expected income minus her effort cost. a) Given the bonus b, the salesperson's best response function is b) Suppose the dealership pays b = 5. Then the expected number of cars sold will be E(Q) QUESTION 7 Firm 1 and Firm 2 are Stackelberg competitors. Firm 1 is the leader and Firm 2 is the follow Firm 1: C₁(Q1) = 4Q1 Firm 2: C2(Q2) = 4Q2 The market demand is QD = 46 -0.5P Compute the SPE of this game. In equilibrium, Firm 1 produces Q₁= ✓, Firm 2 produces Q2= *Select Answer* e = 0.01b e = 0.02b e = 0.03b e = 0.04b e = 0.05b e = 0.06b e = 0.07b e = 0.08b e = 0.09b 1.33 1.70 2.44 2.80 3.55 3.90 he cost functions: is P=
Transcribed Image Text:QUESTION 6 A salesperson is trying to sell cars. The number of cars that she will sell depends on her effort "e" and her luck. Given her effort e, with probability 4e she is able to sell four cars, and with probability (1 - 4e) she is able to sell only one car. Her personal cost of effort is 200e². The dealership pays her a bonus b for each car sold. The salesperson is risk-neutral, and wants to maximize her expected utility, which is her expected income minus her effort cost. a) Given the bonus b, the salesperson's best response function is b) Suppose the dealership pays b = 5. Then the expected number of cars sold will be E(Q) QUESTION 7 Firm 1 and Firm 2 are Stackelberg competitors. Firm 1 is the leader and Firm 2 is the follow Firm 1: C₁(Q1) = 4Q1 Firm 2: C2(Q2) = 4Q2 The market demand is QD = 46 -0.5P Compute the SPE of this game. In equilibrium, Firm 1 produces Q₁= ✓, Firm 2 produces Q2= *Select Answer* e = 0.01b e = 0.02b e = 0.03b e = 0.04b e = 0.05b e = 0.06b e = 0.07b e = 0.08b e = 0.09b 1.33 1.70 2.44 2.80 3.55 3.90 he cost functions: is P=
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