Problem

Suppose we are in an economy with two periods, a durable good last for two periods and a durable good monopolist. The demand for service from the durable good for each consumer is for t=1,2 marginal cost is 0, the discount factor isand consumers are perfectly rational.

Answers the following questions with the information above.

a) (If the monopolist rent out the product, what are the optimal renting rate and the renting quantity in each period?) b) First period price and quantity: First period price and quantity: c) If the monopolist sells out the product and the consumers become short-sighted, is the scheme provides part b implementable? Please explain