Taxes suppose that an information product is produced with, Ask an Expert

Management Studies

(Taxes) Suppose that an information product is produced with zero marginal cost and sold with perfect monopoly power. Each consumer purchases either one or zero units of the product. The overall demand curve is p = A - aq. However, the government taxes the product an amount t dollars per unit. The tax is paid by the producer, so that p is the actual price paid by consumers.

(a) Find the amount sold and the selling price.

(b) Find the producer surplus, consumer surplus, and total tax revenue received by the government. Call the sum of these T.

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92004800

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