Assume a single-price monopolist has an inverse market demand curve given by P(Q)=300-0.5Q, and has a cost curve: C(Q)=125+20Q+0.5Q2. We already know that Monopolist will provide 140 units, Economic profit is 19475, and Economic Rent is 190. If the impact of a 35% ad valorem tax imposed on the consumers in the market. Then:  Q1: What is the equilibrium quantity will be sold in the after-tax equilibrium? Q2: What are the economic rents of the monopolist?

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Assume a single-price monopolist has an inverse market demand curve given by P(Q)=300-0.5Q, and has a cost curve: C(Q)=125+20Q+0.5Q2.

We already know that Monopolist will provide 140 units, Economic profit is 19475, and Economic Rent is 190.

If the impact of a 35% ad valorem tax imposed on the consumers in the market. Then: 

Q1: What is the equilibrium quantity will be sold in the after-tax equilibrium?

Q2: What are the economic rents of the monopolist?

Expert Solution
Given

 P(Q)=300-0.5Q

Q = 600 - 2P

C(Q)=125+20Q+0.5Q2.

MC = dC/dQ

MC = 20 + Q

Quantity = 140 units

Economic profit is 19475

Economic Rent is 190

 

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