3.) Consider the following two-types adverse selection problem as discussed in class, with the agent's cost function C = x0. 1 and OH = 3. Compute the optimal output levels x and a) Suppose 0L transfer payments t (as a function of p) for the two alternative revenue functions (i) R(x) = VT, and (ii) R(x) = 4ln (1+ x). b) Show that and explain why informational rents are decreasing in p, and why the output distortion is increasing in p.

Q: (-14) + (–7)

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A: factors of 24 that add up to 10

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A: Given,  r→t=sint, t, cost                   ...1

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A: Given: 4(5+6)=

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A: Answer : 47

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A: Given: 4:48