A monopolist producing high-quality goods seeks to signal the quality of his product through
a low input price. The number of customers on the market is unchanged. The marginal costs of
producing low quality goods are equal to 1 , the marginal cost of producing high quality goods is 3 . The
interest rate is 10% per annum, the probability of repeated sales in the next period is 85%.
a) Choose and describe a strategy to provide consumers with information about the high quality
of the product.
b) What should be the maximum willingness to pay for high quality goods, so that the quality
signal is effective if the firm expects to sell the product only for two periods; An infinite number of
periods?
2. A monopolist producing high-quality goods seeks to signal the quality of his product through a low input price. The number of customers on the market is unchanged. The marginal costs of producing low quality goods are equal to 1, the marginal cost of producing high quality goods is 3. The interest rate is 10% per annum, the probability of repeated sales in the next period is 85%. a) Choose and describe a strategy to provide consumers with information about the high quality of the product. b) What should be the maximum willingness to pay for high quality goods, so that the quality signal is effective if the firm expects to sell the product only for two periods; An infinite number of periods?