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.

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

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

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

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91837377

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