Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
7th Edition
ISBN: 9781285165950
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 9, Problem 6PA

Subpart (a):

To determine

The impact of export tax on the economy.

Subpart (b):

To determine

The impact of export tax on the economy.

Subpart (c):

To determine

The impact of export tax on the economy.

Subpart (d):

To determine

The impact of export tax on the economy.

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Sam's profit is maximized when he produces   shirts. When he does this, the marginal cost of the last shirt he produces is   , which is    than the price Sam receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is   , which is    than the price Sam receives for each shirt he sells. Therefore, Sam's profit-maximizing quantity corresponds to the intersection of the    curves. Because Sam is a price taker, this last condition can also be written as    .
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