Suppose That a Monopolist Has a Cost Function Given by C(q)=

question 17

Essay

Suppose that a monopolist has a cost function given by C(q)= 10 + 2q + 0.5q².The (inverse)demand for the product is given by P(q)= 47 - q.The government levies a tax of $9 per unit,to be paid to the government by the monopolist.
(a)What is the market quantity and price?
(b)The government levies a tax of $9 per unit,to be paid to the government by the monopolist.What is the new market price and quantity?
(c)How much of the tax do the consumers bear? How much does the monopolist bear?

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Definitions:

Trial Balance

An informal listing of the ledger accounts and their balances in the ledger to aid in proving the equality of debits and credits.

Cost Center

A department within a company where costs can be allocated, but which does not directly generate revenue.

Administrative Department

A segment within an organization responsible for managing general operations and administrative tasks.

Profit Center

A segment or department within a business that is responsible for generating its own revenue and profits.