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What is the rofit-maximizin amount of in ut? of ou ut? P 3 P How much profit does it make when it maximizes profits? (c)
What is the rofit-maximizin amount of in ut? of ou ut? P 3 P How much profit does it make when it maximizes profits? (c) Suppose that the firm is taxed $20 per unit of its output and the price of its input is subsidized by $10. 'What is its new input level? What is its new output level? How much profit does it make now? (Hint: A good way to solve this is to write an expression for the firm's profit as a function of its input and solve for the profitmaximizing amount of input.) (d) Suppose that instead of these taxes and subsidies, the firm is taxed at 50% of its profits. Write down its after-tax profits as a function of the amount of input. What is the profit maxirnizing amount of output? How much profit does it make after taxes
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