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Q1) The inverse demand curve a monopoly faces is p = 100 - Q. The firm's cost curve is C(Q) = 10 + 5Q (so MC = 5). What is the profitmaximizing solution? How does your answer change if C(Q) = 100 + 5Q ?
Q2)The inverse demand curve a monopoly faces is p = 10Q-0.5 .
a. What is the firm's marginal revenue curve?
b. The firm's cost curve is C(Q) = 5Q . What is the profit-maximizing solution?
Q3) Consider the inverse demand curve p = 210 - 3Q and the cost function C = 100 + 2Q2 . If the market were competitive, calculate the incidence of a specific tax, t=7, that would fall on consumers. Calculate the incidence of the same tax if the market were instead a monopoly.
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