A monopolist serves two cities denoted city A and city B.

Each city has an inverse demand curve given by:P=20Q

The monopolist produces the good in city A at constant marginal cost:MC=4.

The monopolist can ship units of the good from city A to sell in city B at a cost of 4 per unit.

(a) (6 points) If the monopolist canprevent resalebetween the cities, what prices will it choose to set?

(b) (6 points) If consumers can drive between the cities at a cost of 4, briefly explain how it would affect the prices that you calculated in part (a). (Note: for this part, you do not need to calculate the optimal pair of prices).

(c) (2 points...and the last question of the exam)What prices should the monopolist set in city A and B if it wants to maximize profits, but can't prevent consumers from driving between the two at a cost of 4?