A monopolist has marginal cost of $30 and faces an inverse demand of P-90-3q. They choose price (p₁) and quantity (91) to maximize profit. Next, suppose the government institutes a $30 per-unit tax on the monopolist. The firm again chooses price (p₂) and quantity (92) to maximize profit. What is the change in price from p₁ to P2?

A monopolist has marginal cost of $30 and faces an inverse demand of P-90-3q. They choose price (p₁) and quantity (91) to maximize profit. Next, suppose the government institutes a $30 per-unit tax on the monopolist. The firm again chooses price (p₂) and quantity (92) to maximize profit. What is the change in price from p₁ to P2?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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