monopolist expected pofit

g. [20 marks] Consider a world in which a risk-neutral monopolist offers a product for sale. The cost of production is c > 0 per product. In each period, the product can either be fully functional or totally defective. It is totally defective with probability, 1 p, and is thus fully operative with probability, p, where 0 0 for a fully-functional product and zero for a totally defective product. In any transaction, the equilibrium price is equal to a consumer's expected valuation. There is no discounting. Suppose the monopolist provides a one-time replacement warranty. That is, the monopolist replaces the product if it is defective. However, if the replacement is also defective, the monopolist does not replace it. (i) For each sale of the product, determine the monopolist's expected prot, 11'. under this one- time replacement warranty policy. 611' (ii) Determine the sign of an