Help, economics, Microeconomics

A monopolist faces the inverse demand for its output:
p = 30 – Q The monopolist also has a constant marginal and average cost of $4/unit. The government is seeking ways to collect tax revenue from the monopolist and faces two proposals:
i. Impose a specific tax of t on the monopolist.
ii. Impose an ad valorem tax of a on the monopolist. a. Suppose the government imposes a 20% ad valorem tax on the monopolist. What price and quantity does the monopolist choose and how much revenue does the government generate from the tax? b. Rather than an ad valorem tax, what is the government’s revenue from a specific tax of t imposed on the monopolist? Your answer should be in terms of ‘t’. c. Show that a specific tax of $3.70/unit generates the same revenue as a 20% ad valorem tax (approximately).
Posted Date: 3/15/2012 7:14:30 PM | Location : United States







Related Discussions:- Help, economics, Assignment Help, Ask Question on Help, economics, Get Answer, Expert's Help, Help, economics Discussions

Write discussion on Help, economics
Your posts are moderated
Related Questions
Demand Curve The demand curve is a graph which presents the amount of a good that consumers are willing and able to buy at various prices. A normal demand curve is downward slo

Question:  Explain the contribution of capital accumulation in the progress of an economy? Capital makes the technological progress of the economy possible. Different technol

Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon t $3.50 a gallon. Your usage of paint drops from 35 gallons to 20 gallons a month. 1. Co

Society of International Financial Telecommunications: The foreign exchange market operates worldwide, that is, the reach of the foreign exchange market is global. The foreign

Water Meter Replacement Program: Typically water providers install meters at each service address, read meters monthly and charge customers according to their usage. In resid


Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 The demand schedule c

describe engineering cost theory in detail

1.  The marginal benefit (demand) curve for pollution for an industry is P=100-4*Q, where Q is emissions in tons.  The current emissions tax (price) for pollution is $40/ton.  Regu

what are the sources of monopoly power