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Assume that a concrete producer is the only firm within 300 hundred miles. The firm faces a downward sloping demand curve according to the demand
Assume that a concrete producer is the only firm within 300 hundred miles. The firm faces a downward sloping demand curve according to the demand (in tons) at various prices shown in the table. The firm's marginal cost is $2.00 per ton and fixed costs are $1,000.
Price | Quantity |
$2.00 | 2,400 |
$3.00 | 1,400 |
$4.00 | 400 |
- Derive the demand equation for concrete.
- Graph the demand and any other information or equations relevant to this market scenario/context.
- Find the profit maximizing quantity and price. What is the profit at this point?
- Is this an efficient outcome? Explain with numbers and words.
- Suppose a per-ton concrete excise tax is suggested. Given this market scenario, what would be the expected impact of this tax? Provide calculation and explanation support.
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