show ans and step! 28. Suppose that in Enigma, Ohio, Uselets have a productivity
ID: 1218245 • Letter: S
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show ans and step!
28. Suppose that in Enigma, Ohio, Uselets have a productivity of $1,000 and Candus have a productivity of $5,000 per month. You can't tell Uselets from Candus by looking at them or asking them, and it is too expensive to monitor individual productivity. andus. however, have more patience than Uselets. Listening to an hour of dull lecture is as bad as losing $250 for a Uselet and $100 for a Candu. There will be a separating equilibrium in which anybody who attends a course of H hours of lectures is paid $5,000 per month and anybody who does not is paid $1,000 per month a. if 16 H 40 b. if 14 H 35 c. if 16 H 80 d. only in the limit as H approaches infinity e. for all positive values of H.Explanation / Answer
If Uselets attend lectures, income : 5000 - 250H
If Uselets does not attend lectures: Income = 1000
Uselets will not attend lectures only if 1000>5000-250H or 4000>250H or H>16.
Hence minimum number of lectures would be 16 hours.
Similarly Candus attend lectures only if income from attending lectures is more than income from not attendinh,
that is 5000-100H>1000
or H<40.
Thus maximum hours of lecturs to be 40 hours.
Thus answer a) 16<H<40 is correct.
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