The peak and off-peak periods are of equal length. Demand in the peak period is P p = 100 - Qp and in the off-peak period Po = A - Qo. Production is fixed proportions with variable costs of $2 per unit and capital costs per period of β. Capacity costs are sunk and capacity cannot be adjusted between periods.

(a) Suppose that A = 50 and β = 4. Find the optimal capacity, peak price, and off-peak price.

(b) Suppose that A = 90 and β = 8. Find the optimal capacity, peak price, and off-peak price.