Each student in Econ 99 is either above the average, the average or below theaverage, and there is an equal proportion of each type. Regardless of one's type,being thought to be above the average is worth 12; being thought to be the averageis worth 9; and being thought to be below the average is worth 0. One way in whicha student can try to indicate their type to others is by choosing 'to signal. Thissignal is a crude `yes-or-no' choice; that is, each student can only choose whether tosignal or not. The cost of the signal is 20 for below-the-average types; 1 for theaverage types; and O for above-the-average types. Whether or not a studentchooses to signal, after he or she has made that decision, he or she must take acompulsory test. The outcome of the test is completely independent of whether ornot a student has signaled. Above-the-average types always pass the test; below-the-average types never pass; and the average types pass with probability .5.i) Suppose there were an equilibrium in which only the average types signaled. Insuch an equilibrium, what must the class of Econ 99 believe when it sees a studentsignaling and passing the test; signaling and failing; not signaling and passing; or notsignaling and failing?ii) Explain that there is indeed an equilibrium in which only the average types signal.

Game theory is a department of mathematics and economics that studies choice-making in interactive…

Answered: equilibrium

Business

Economics

equilibrium

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

On Sundays, people in Los Angeles consider a boat to Catalina Island to spend the day on the beach there. The utility that a person gets from visiting Catalina is 1-[n/10] – p , where n is the number of visitors on the island and p is the price of round-trip transportation (by boat). (Note that a visitor obtains more satisfaction if there are fewer other visitors on the island). The utility of staying home is zero. In equilibrium, how many people visit the island on a given Sunday? ( Your answer should depend on p.)
Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend s company and is willing to pay $30 just to spend an evening with her.
Consider the problem of an individual that has Y dollars to spend on consuming over two periods. Let c, denote the amount of consumption that the individual would like to purchase in period 1 and c2 denote the amount of consumption that the individual would like to consume in period 2. The individual begins period 1 with Y dollars and can purchase c1 units of the consumption good at a price P and can save any unspent wealth. Use sı to denote the amount of savings the individual chooses to hold at the end of period 1. Any wealth that is saved earns interest at rate r so that the amount of wealth the individual has at his/her disposal to purchase consumption goods in period 2 is (1+r)s1. This principal and interest on savings is used to finance period 2 consumption. Again, for simplicity, we can assume that it costs P2 dollars to buy a unit of the consumption good in period 2. 2 The individual's total happiness is measured by the sum of period utility across time, u(cı) + u(c2). Let u(c)…
Van has plans to go to an opera and already has a $100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Amy, whom Van has wanted to date for a long time, asks him to a party. Van would prefer to go to the party with Amy and forgo the opera, but he doesn't want to waste the $100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done? 1. Incorrectly allowed a sunk cost to influence his decision 2. Made a choice that was not optimal 3 Correctly ignored a sunk cost Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
social preferences are not really preferences, and unselfish behavior is really motivated by the desire to follow rules and conventions with respect to what is fair. Is this interpretation correct?
Uncertain what would be the correct answer
Several local golf tournaments are coming up and Tommy needs to purchase golf balls in preparation. He has set a $150 budget and will choose golf balls that will give him as much utility as possible. A local sporting goods store sells a box of golf balls at a retail price of $30 and Tommy purchases 2 boxes. A few buddies tell Tommy about an online store that offers boxes of golf balls at a discounted price of $21, while all other prices remain the same, and Tommy decides to purchase 3 additional boxes of golf balls to keep on hand. Given this information, plot Tommy's demand curve for golf balls. Provide your answer below: Price of Golf Ball Boxes Online Store (4,$22) 20 Local Store (1,$10) —101 Quantity of Golf Ball Boxes
Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats two miso per one sushi; Daniel eats one miso per one sushi. They throw away any extra soup or sushi as it would not give them any pleasure. Once, they were stuck in the office together for hours, marking students' assignments. Ken had one miso soup and 9 sushi with him; Daniel had 9 miso and one sushi. (For the purpose of this question, assume that miso and sushi can be divided into little pieces, so one-half miso or one-hundredth of sushi makes sense) a) Draw the Edgeworth box for Ken and Daniel. Please put Ken at the origin and Daniel "upside down"; put miso on the horizontal axis and sushi on the vertical one. Show their endowment point. b) Show all Pareto optimal allocations of miso and sushi between Ken and Daniel in the Edgeworth Box. You can use the graph from a). Please note that this question is a bit tricky, though not difficult. Draw a bunch of indifference curves and look for "tangencies".