1.A monopolist faces a downward sloping demand curve and the question of
price or demand uncertainty no longer presents itself. The question that
arises is the manner in which uncertainty affects the relation between
quantity and price. For each of the following three demand functions
comment on the quantity of output that the monopolist will choose to
produce (uncertainty maximum) vis. a vis. the certainty maximum level:

(a) p=g(q)+u, E(u)=0   
(b) p=g(q)*u, E(u)=1, u is greater than or equal to 0 but smaller than or equal to 2
(c)  q=g(p)*u, E(u)=1.
In each of the 3 demand functions, u denotes uncertainty and the first derivative of p or q with respect to u is great than 0.
2.Comment on the economic significance of specifying uncertainty in the two different forms as in questions 1 (a) and 1 (b).
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