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1. (classical monopoly pricing) A monopolist faces a demand curve q (p) = 100 p:
(a) If its cost function is C (q) = 2q; what is the optimal level of price and quantity?
(b) If its cost function is C (q) = 10+2q (i.e. the rm has a xed cost 10), what is the optimal level of price and quantity?
2. (price discrimination) A monopolist sells bikes in two markets with demand curves given by
q1 (p1) = 100 2p1; q2 (p2) = 100 p2:
The monopolist has a constant marginal cost c = 20 and has no xed cost. If the monopolist can price discriminate, what price should it charge in each market?
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