Soft drink producer's operation in each week produces q liters of mineral water at a cost of aq) = 2000 + 5q+ 0.001q dollars, selling its output at $15 a liter. The government decides to levy a tax of r dollars a liter on the producer's output, knowing that the producer will adjust the output to maximize its profit with respect to changed situations. . What is the government's maximum tax revenue T= rq , and at what tax rate is achieved (? p. b) Investigate the relationship between producer's maximum profit change and tax ? . C) discuss the situation. %3D

Soft drink producer's operation in each week produces q liters of mineral water at a cost of aq) = 2000 + 5q+ 0.001q dollars, selling its output at $15 a liter. The government decides to levy a tax of r dollars a liter on the producer's output, knowing that the producer will adjust the output to maximize its profit with respect to changed situations. . What is the government's maximum tax revenue T= rq , and at what tax rate is achieved (? p. b) Investigate the relationship between producer's maximum profit change and tax ? . C) discuss the situation. %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Soft drink producer's operation in each week
produces q liters of mineral water at a cost of
ag) = 2000 + 5g+ 0.001q dollars, selling its
output at $15 a liter. The government decides
to levy a tax of r dollars a liter on the
producer's output, knowing that the producer
will adjust the output to maximize its profit
with respect to changed situations.
a. What is the government's maximum tax
revenue T= rq , and at what tax rate is
achieved (?
5. b) Investigate the relationship between
producer's maximum profit change and tax ?
c. C) discuss the situation .

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