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*

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question

Q6

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=
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman