A monopolist has an inverse demand curve given by p(y) = 12 y and a cost curve given

by c(y) = y2

.

(a) What is its profit-maximizing level of output and price charged if the monopolist

practices a uniform pricing scheme?

(b) Compute consumers' surplus, monopolists' profit and the deadweight loss of monopoly

at the optimum price found above.

(c) What is the optimal two-tier pricing scheme? Compare consumers' surplus, monopo-

list's profit and the deadweight loss resulting from this pricing with their counterparts

when the monopolist uses uniform pricing.