a) Show that, with a linear demand curve, the imposition of a per-unit tax on a monopoly will cause price to rise by less than the tax. Would this be true for a constant elasticity demand curve?
Suppose that the monopolist faces a linear demand curve
b) Consider the following possible schemes for taxing a monopoly:
i) A proportional tax on profits.
ii) A proportional tax on the gap between price and marginal cost.
iii) A tax on each unit produced.