Question

A monopolist faces the inverse demand for its output: p = 30 – Q The monopolist faces a cost curve: C(Q) = 5Q. The government is seeking ways to collect tax revenue from the monopolist by imposing an ad valorem tax of 20% on the monopolist.

a. What price and quantity does the monopolist choose (post-tax) and how much revenue does the government generate from the tax? Does the monopolist earn any profits in this case? If so, how much is it? Show all the steps for full credit.

b. Draw an approximate graph to depict the before-tax and after-tax price – quantity combination (in one graph).

Answer #1

A monopolist faces the inverse demand for its output:
p = 30 – Q
The monopolist faces a cost curve: C(Q) = 5Q. The government is
seeking ways to collect
tax revenue from the monopolist by imposing an ad valorem tax of
20% on the
monopolist.
1)Draw an approximate graph to depict the before-tax and
after-tax price – quantity
combination (in one graph).

A monopolist faces the inverse demand for its output:
p = 30 – Q
The monopolist faces a cost curve: C(Q) = 5Q. The government is
seeking ways to collect
tax revenue from the monopolist by imposing an ad valorem tax of
20% on the
monopolist.
a. What price and quantity does the monopolist choose (post-tax)
and how much
revenue does the government generate from the tax? Does the
monopolist earn any
profits in this case? If so, how much...

A monopolist faces the inverse demand function p = 300 – Q.
Their cost function is c (Q) = 25 + 50Q. Calculate the profit
maximizing price output combination

A monopolist faces an inverse demand curve P(Q)= 115-4Q and
cost curve of C(Q)=Q2-5Q+100.
Calculate industry output, price, consumer surplus, industry
profits, and producer surplus if this firm operated as a
competitive firm and sets price equal to marginal cost.
Calculate the dead weight loss sue to monopoly.

Example 1:
Suppose a monopolist faces an inverse demand function as p = 94
– 2q. The firm’s total cost function is 1.5q2 + 45q +
100. The firm’s marginal revenue and cost functions are MR(q) = 90
– 4q and MC(q) = 3q + 45.
How many widgets must the firm sell so as to maximize its
profits?
At what price should the firm sell so as to maximize its
profits?
What will be the firm’s total profits?

A monopolist faces demand Q = 110 – P, and has a total cost of
50 + 5Q + 2Q2. Then to
maximize profit, the monopolist should produce ___ units of Q and
charge a P = ___.
(a.) 25.5; 72.5
(b.) 17.5; 75
(c.) 25.5; 84.5
(d.) 17.5; 92.5
Could you draw the graph with curves?

. A town has a monopoly supplier of potable water. The
monopolist faces the following demand, marginal revenue, and
marginal cost curves:
Demand: P = 70 – Q
Marginal Revenue: MR = 70 – 2Q
Marginal Cost: MC = 10 + Q
Graph these curves.
Assuming that the firm maximizes profit, what quantity does it
produce? What price does it charge? Show these results on your
graph.
The local government decides to impose a price ceiling that is
10 percent...

1) The inverse demand curve a monopoly faces
is
p=110−2Q.
The firm's cost curve is
C(Q)=30+6Q.
What is the profit-maximizing solution?
2) The inverse demand curve a monopoly faces
is
p=10Q-1/2
The firm's cost curve is
C(Q)=5Q.
What is the profit-maximizing solution?
3) Suppose that the inverse demand function for
a monopolist's product is
p = 7 - Q/20
Its cost function is
C = 8 + 14Q - 4Q2 + 2Q3/3
Marginal revenue equals marginal cost when output
equals...

Consider a monopolist that faces an inverse demand for its
product given by
p=600-4Q
The firm has a cost function C(Q)=9Q2+400
What is the profit-maximizing price for this monopolist? Provide
your answer to the nearest cent (0.01)

Consider a monopolist that faces an inverse demand for its
product given by
p=600-9Q
The firm has a cost function C(Q)=3Q2+500
What is the profit-maximizing price for this monopolist? Provide
your answer to the nearest cent (0.01)

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