Calculate the profit-maximizing price for this seller

Reference no: EM131335913

Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P = 50 - 0.4Q. The seller can produce handbags for a constant marginal and average total cost of $10.

a. Calculate the profit-maximizing price for this seller.

b. Suppose the government levies a $4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers.

c. Who bears the burden of this tax?

Reference no: EM131335913

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