Please could I get help with an Economics homework question

Posted on 2014-01-23 15:28:00 in Economics by COOL

The question is this:



2 period setting, consumers value consuming 1 unit at v=1 or do not value the good at all. Consumer type alpha attaches a probability alpha to valuing the good. Alpha is uniformly distributed on [0,1]. Monopolist has no production costs and does not discount period 2 profits.



Suppose consumer is 1 period lived. Solve the optimal price each period.



I'm stuck and have no idea how to go about answering this. I'd be extremely grateful for any help. Thank you!

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