Question
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?
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