Profit maximizing monopolist faces demand function

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1. A profit maximizing monopolist faces a demand function given by Q(p)=70-p. The cost function is C(q)=5q. Suppose that the government introduces a tax of $10 per unit of output. As a result of the tax, the monopolist will? (increase the price to what?)

2. A price-discriminating monopolist with a constant marginal cost sells in two separate markets such that the goods from one market cannot be resold in the other. The profit maximizing price in market 1 is 4 and in market 2 is 8. If the price elasticity of demand in market 1 is -1.5, what is the price elasticity of demand in market 2?

Reference no: EM131101580

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