Suppose a monopolist faces inverse demand of P = $30 - Q has fixed
costs of $30 and variable costs of $6 per unit.
What is the profit maximizing price and quantity.  
Suppose another firm was considering entering with the same cost
structure, but the entrant assumed the incumbent would continue
selling the quantity found above.  Could the entrant profitably enter?
If the incumbent wanted to induce the potential entrant to stay out,
what price must it charge?
If incumbent had to choose between a) a monopoly for one period and a
Cournot duopoly from then on or b) charging the limit entry price
forever, which yields more profits.  (Assume the interest rate is 10%)

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Clarification of Question by navidhs-ga on 17 Apr 2006 10:12 PDT

there is a second and thid part to this question which is:
As given, the above monopolist can not commit to the Limit Entry price
and output combination.  Suppose the monopolist can commit to a
technology in which his fixed costs were $100 and his variable costs
were $2 per unit.  Show in a game tree that he would want to adopt
this new technology.
Suppose instead of the new technology the incumbent could lobby for
stricter EPA regulations that would raise costs to both firms.
How high would these costs have to be to block entry if they were fixed costs? 
How high would these costs have to be to block entry if they were variable costs?