Consider a Monopolist Who Has a Total Cost Curve Of

question 11

Essay

Consider a monopolist who has a total cost curve of: TC = 7X + (1/2)X2. The market demand equation is Xd = 386 - (1/2)P.
A)What are the equilibrium quantity, equilibrium price, and profits in this market?
B)Suppose that a unit tax of $1 is placed on the monopolist. What happens to the equilibrium quantity, equilibrium price paid by consumers, and profits? How much tax revenue does the government generate?
C)Suppose that the same unit tax of $1 is placed on consumers. What happens to the equilibrium quantity, equilibrium price paid by consumers, and profits? How much tax revenue does the government generate?
D)What can be said about the tax revenues generated?

• A)What are the equilibrium quantity, equilibrium price, and profits in this market?
• B)Suppose that a unit tax of $1 is placed on the monopolist. What happens to the equilibrium quantity, equilibrium price paid by consumers, and profits? How much tax revenue does the government generate?
• C)Suppose that the same unit tax of $1 is placed on consumers. What happens to the equilibrium quantity, equilibrium price paid by consumers, and profits? How much tax revenue does the government generate?
• D)What can be said about the tax revenues generated?

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