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5. Amazon is a monopolist with a U-sha ped average total cost curve that sells books. Amazon maximizes prots selling print ed books to consumers

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5. Amazon is a monopolist with a U-sha ped average total cost curve that sells books. Amazon maximizes prots selling print ed books to consumers for $ 10 each, selling a total of 10,000 books. The consumers have downward sloping demand curves. Now suppose in an effort to fund state spending on healthcare for all. the state government imposes a tax of $2 on printed books to be paid by the consumer which results In a decrease oftotal books sold to 8,000 books a. Using a graphical explanation. show the impact of the new tax. Label the tax wedge. the price the consumer pays. the price amazon receives [6 points] b. Show and calculate prots earned by amazon selling printed books before and after the tax. {4 points} c. Explain in words why the tax incidence is shared between amazon and the consumer. We all know that the only place we get new printed books is from amazon. they are clearly a price setter in this market. Explain in detail. {4 points)

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