Q.1 Consider a firm that produces an experience good and sells it to a continuum of consumers with a total mass one. There are infinitely many time periods. In every period, each consumer is willing to buy at most one unit of the good provided that its quality is high. Consumers know that the firm can choose every period whether to produce a high quality good at a cost of 10 per unit or a low quality good at the cost of 4 per unit. Suppose that consumers adopt a boycott strategy and never buy from a firm that sold a low quality good in the past (note: quality is discovered after consumption). Let the discount factor be 8 = 1/3. What is the lowest price that guarantees the production of high quality in every period? If need be, round off your answer to the nearest whole number. Q.1 Consider a firm that produces an experience good and sells it to a continuum of consumers with a total mass one. There are infinitely many time periods. In every period, each consumer is willing to buy at most one unit of the good provided that its quality is high. Consumers know that the firm can choose every period whether to produce a high quality good at a cost of 10 per unit or a low quality good at the cost of 4 per unit. Suppose that consumers adopt a boycott strategy and never buy from a firm that sold a low quality good in the past (note: quality is discovered after consumption). Let the discount factor be 8 = 1/3. What is the lowest price that guarantees the production of high quality in every period? If need be, round off your answer to the nearest whole number