Statistics- Assume that demand for services per period is Pt

| February 25, 2017

Question
Assume that demand for services per period is Pt = 1000 – Qt where Qt is the stock of the
durable consumed. Let the discount factor for consumers and the firm be given by d. Find the
profit-maximizing prices and outputs for a durable goods monopolist with zero marginal costs
when there are two periods for the following:
(a) A monopolist who leases.
(b) A monopolist who sells its output, but is able to commit to prices.
(c) A monopolist sells who its output, but is not able to commit to prices.
(d) What is the impact of a discount factor less than one? Why?

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