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Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2) q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.The profit-maximizing two-part tariff yields total revenue of
Elastic
A characteristic of a product or service indicating that a change in price leads to a significant change in the quantity demanded or supplied.
Laffer Curve
An illustration of the relationship between tax rates and tax revenue, suggesting that there is an optimal tax rate that maximizes revenue.
Tax Rate Reductions
A decrease in the percentage at which income or transactions are taxed by governmental authorities.
Price Inelastic
A situation where the demand for a good or service remains relatively unchanged despite changes in its price.
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