Assume inverse demand function for game console in an imaginary country is P=1200-4Q and the total cost function is TC=400+4Q2. Government put $120 of specific tax on production. If the market is competitive what is the incidence of tax on consumer? If the market is monopolist what is the incidence of tax on consumer?
Assume inverse demand function for game console in an imaginary country is P=1200-4Q and the total cost function is TC=400+4Q2. Government put $120 of specific tax on production. If the market is competitive what is the incidence of tax on consumer? If the market is monopolist what is the incidence of tax on consumer?
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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Question
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Assume inverse demand function for game console in an imaginary country is P=1200-4Q and the total cost function is TC=400+4Q2. Government put $120 of specific tax on production.
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If the market is competitive what is the incidence of tax on consumer?
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If the market is monopolist what is the incidence of tax on consumer?
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