What is the new optimal price and quantity

Reference no: EM13182929

Consider a monopolist facing demand function Q = 100 - p. It has a marginal cost function MC(q) = 20.

a.) Suppose the government imposes the following kind of sales tax: there is no tax for selling the first 35 units, but for selling every unit beyond the thirty-fifth unit, the seller has to pay the government an additional $12. What is the new optimal price and quantity? How much tax will the government raise?

Reference no: EM13182929

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