Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

I am very confused with these questions and how to calculate properly. Please help to explain, so I can digest and understand better. A monopoly

I am very confused with these questions and how to calculate properly. Please help to explain, so I can digest and understand better.

A monopoly firm with a demand curve given by the following equation: P = $500 10Q, where Q equals quantity sold per day. The marginal cost curve is MC = $100 per unit.

When assumed that the firm has no fixed cost how do I logically calculate the questions below:

a) How much will the firm produce? b) How much will it charge? c) Can you determine its profit per day? (Hint: you can; state how much it is.) d) Suppose a tax of $1,000 per day is imposed on the firm. How will this affect its price? e) How would the $1,000 per day tax its output per day? f) How would the $1,000 per day tax affect its profit per day? g) Now suppose a tax of $100 per unit is imposed. How will this affect the firm's price? h) How would a $100 per unit tax affect the firm's profit maximizing output per day? i) How would the $100 per unit tax affect the firms profit per day?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

Students also viewed these Economics questions