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A monopolist faces the inverse demand for its output: p = 30 – Q The monopolist...

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.

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