ECO204Y5 Study Guide - Midterm Guide: Arc Elasticity, Playstation 4, Budget Constraint
Document Summary
Eco204: solutions to test 1: (20 points total) peter van houten is a writer and has just finished writing his first manuscript, titled an imperial affliction . Peter wants to submit his manuscript to the three publishing firms to have it published. If accepted, assume that the manuscript can only be published as a book by one firm. In other words, peter can"t accept multiple offers. House 1 is the ranked as the number 1 firm and will pay peter ,000 if they publish his book. Because of their reputation, they also have the lowest acceptance rate: they accept only 15% of all manuscripts they receive. House 2 is the second-ranked firm and will pay peter ,500 if they accept and publish his book. House 3 has the lowest reputation and will pay peter only ,000 if they accept and publish his book. Ev1 = (prob house 1 accepts)(payment from house 1) + (prob house 2 accepts)(payment from.
