If a monopolist produces qunits, she can charge 400 4q dollars per unit. The variable cost
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If a monopolist produces qunits, she can charge 400 – 4q dollars per unit. The variable cost is $60 per unit.
a. How can the monopolist maximize her profit?
b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)?
c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.
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