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Suppose a single-price monopolist faces an inverse market demand curve given by P(Q)=211-2Q and has a marginal cost curve given by MC(Q)=Q. Based on these
Suppose a single-price monopolist faces an inverse market demand curve given by P(Q)=211-2Q and has a marginal cost curve given by MC(Q)=Q. Based on these market curves, the monopolist will maximize its profits by selling 42.20 units for $126.60 each. This will result in a deadweight loss of $1187.23.Suppose that policymakers are considering a 25% ad valorem tax applied to the consumers. Calculate the impact that this tax will have on the deadweight loss generated by this market.
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