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Fixed costs of the monopolist

1) A monopolist faces the following demand function for its product:

Q = 45 - 5P

The fixed costs of the monopolist are $12 and the monopolist incurs variable costs of $5.00 per unit.

a) What is the profit-maximizing level of price and quantity for this monopolist? What will profits be at this price and output level?

b) If the government imposes a franchise tax on the firm of $10, what will be the profit-maximizing level of price, output, and profits?

c) If the government imposes an excise tax of 50 cents per unit of output sold, what is the impact on the profit-maximizing level of price, outputs and profits?

d) If the government imposes a ceiling of $6 on the price of the firm's product, what output will the firm produce and what will be total profits?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M927306

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