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Question: Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule, and columns 2 and 3 set out the total cost schedule:

      Price                           Quantity                 Total cost
(dollars per ride)          (rides per month)       (dollars per month)

       220                                0                           80

       200                                1                         160

       180                                2                         260

       160                                3                         380

       140                                4                         520

       120                                5                         680

If instead of taxing Hot Air's profit, the government imposes a sales tax on balloon rides of $30 a ride, what are the new profit-maximizing quantity, price, and economic profit?

Microeconomics, Economics

  • Category:- Microeconomics
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