How to do my economic questions?

Posted on 2014-12-08 07:01:00 in Economics by JACK

You are willing to pay $15 for a bad restaurant steak and $40 for a great restaurant steak, but you can't tell until you've already ordered. Imagine that restaurants can do something that costs $X per steak if they serve great restaurant steak, and $X+10 per steak if they serve bad restaurant steak. If you see the signal, you will believe that they serve good steak and pay $40. If you don't, you'll only pay $15.

What is the lower bound of X (cost of signal), so that only the great restaurants signal?

What is the upper bound of X (cost of signal), where only the great restaurants signal?

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