Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P = 50
Question:
a. Calculate the profit-maximizing price for this seller.
b. Suppose the government levies a $4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers.
c. Who bears the burden of this tax?
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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