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Determine the difference between high- and low-quality units

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Reference no: EM133582318

Question: Suppose that Al is thinking about purchasing a good from a local seller, Bob, that is known to have low quality units P% of the time and good units (1-P) % of the time. Al has two different net total benefit functions, one for the low quality good and the other from the high quality good. Both are strictly concave and increase as her personal income increases. Determine her demand function for this merchant's product if she cannot determine the difference between high- and low-quality units at the time of purchase.

 

 

 

Reference no: EM133582318

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