Consider a monopolist facing an uncertain inverse demand curve p = a bq + . When setting its price or quantity the monopolist does not know but knows that E[] = 0 (expected value) and E[ 2 ] = 2 (variance). The cost function of the monopolist is given by C(q) = c1q + c2q 2 2 with a > c1 > 0 and c2 > 2b. Show that the monopolist prefers to set a quantity if the marginal cost curve is increasing and a price if the marginal cost curve is decreasing. Provide a short intuition for the result.