Qa monopolist faces the inverse demand for its output p 30

Assignment Help Business Economics

Reference no: EM13352898

Q. 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. Elucidate what quantity and price does the monopolist choose and how much revenue does the government generate from the tax?

b) Somewhat than an ad valorem tax, elucidate 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).

Reference no: EM13352898

Questions Cloud

Q1 signals carried by hormones must eventually be : q1. signals carried by hormones must eventually be terminated response continues for a limited time. examine two

Q1 suppose that ex is the exchange rate among the us dollar : q.1. suppose that ex is the exchange rate among the u.s. dollar and the chinese yuan in that ex indicates the number of

Q at puberty the adolescent female body changes in both : q. at puberty the adolescent female body changes in both structure and function of several organ systems primarily

Q1 suppose the diameter of the field of vision in your : q1. suppose the diameter of the field of vision in your microscope is 2 mm under low power. if one bacillus cell is 2um

Qa monopolist faces the inverse demand for its output p 30 : q.a monopolist faces the inverse demand for its output p 30 - q the monopolist also has a constant marginal and

Q1 you are conducting fieldwork and find out two groups of : q1. you are conducting fieldwork and find out two groups of squirrels living on opposite sides of a lake. how would you

Q1 suppose the supply of coal is perfectly inelastic and : q1. suppose the supply of coal is perfectly inelastic and the price elasticity of demand for coal is -0.4. if the

Q1 assume that the popular car dealer in your area sells : q1. assume that the popular car dealer in your area sells 2.50 of the entire vehicles. if all other car dealers sell

Q1 recognize the strengths and weakness of callaway : q1. recognize the strengths and weakness of callaway taylormade titleist ping and nike. which company has a competitive

User Account

All Pages