2. Now suppose you must oeslgn a tax on the monopoly. 2.1 2.2 First, suppose you consider a sales tax of 113% on this market. Suppose that the rm has to pay the tax, as is typically the case with sales taxes. Hence, if the rm produces quantityr y of output, the price paid by consumers is p = A B + 3;, but the price received by the rm is .9}: = .924 .95 + y, where the .9 appears because the rm gets to keep only ninety percent of the purchase price, paying the remaining ten percent to the government in taxes. Find the prot maximizing quantity of output for the rm, the price paid by consumers, the price received by the rm, and the rm's prot. Explain how these answers compare to those of part 1.1. In particular, do consumers pay more as a result of the tax? Does the price received by the rm fall? Does the rm's prot fall? Instead of a sales tax, the government considers a prots tax. Hence, if the rm chooses quantity of output 3; and charges price p = A B + y, the gov- ernment collects 1'; {pg y} = t{{A B + my 3:11.92) in tax revenue, leaving {1 t) {{A B + y) y yz) as after-tax prot for the rm. IOnce again, nd the rm's prot-maximizing quantity of output and the resulting price. 1llil'hat effect does the prots tax have on the quantity of output and price? 1Uilhat effect does it have on the rms prot? In light of your answers, given that a xed amount of revenue is to be raised, which tax would consumers prefera sales tax or prots tax? 1Why