A monopoly firm faces a demand curve given by the following, Ask an Expert

Economics

A monopoly firm faces a demand curve given by the following equation: P = $500 ? 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces no fixed cost.

How much will the firm produce?

How much will it charge?

Can you determine its profit per day? (Hint: you can; state how much it is.)

Suppose a tax of $1,000 per day is imposed on the firm. How will this affect its price?

How would the $1,000 per day tax its output per day?

How would the $1,000 per day tax affect its profit per day?

Now suppose a tax of $100 per unit is imposed. How will this affect the firm’s price?

How would a $100 per unit tax affect the firm’s profit maximizing output per day?

How would the $100 per unit tax affect the firms profit per day?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91233988

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