Compute the profit - maximizing price for this seller

Reference no: EM13392836

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: EM13392836

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