Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An industry consists of many identical firms, each with the short-run cost function: c(y)=80+25y6y^2 +y^3 i. If the market price is , derive the supply

An industry consists of many identical firms, each with the short-run cost function: c(y)=80+25y6y^2 +y^3

i. If the market price is , derive the supply curve of the firm y(p).

ii. If the government imposes a lumpsum tax of dollars on every firm in

the industry, how will it change the output choice of each firm in the short run? Hint: how will this change the expression for the firm's profit? Explain.

iii. If the government imposed a percentage tax of t (0,1) on a firm's profits, how would that change the output choice of each firm in the short run? Explain.

iv. If the government imposed a tax of $t per unit produced by a firm, how would that change the output choice of each firm in the short run? Explain.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics

Authors: Luke M. Froeb, Brian T. McCann, Michael R. Ward

5th Edition

1337106666, 978-1337106665

More Books

Students also viewed these Economics questions

Question

=+b) Which model do you prefer? Explain briefly. Section 18.4

Answered: 1 week ago