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Ad Valorem Welfare Impact. Suppose a single-price monopolist faces an inverse market demand curve given by P(Q} = 389 20 and has a marginal cost
Ad Valorem Welfare Impact. Suppose a single-price monopolist faces an inverse market demand curve given by P(Q} = 389 20 and has a marginal cost curve given by MCtQ) = Q. Based on these market curves, the monopolist will maximize its prots by selling 77.80 units for $233.40 each. This will result in a deadweight loss of $4035.23. Suppose that policy makers are considering a 38% ad valorem tax applied to the consumers. Calculate the impact that this tax will have on the deadweig ht loss generated by this market. |.e., calculate the change in deadweight loss in the after-tax market relative to the pre-tax market. -:'j::- A. 1001.10 B. 555.05 Linc. 1716.17 -:"::- D. 1430.14 "12- E. 1573.15
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