Discuss about the horizontal marginal cost schedule

Reference no: EM132133700

Question: Consider a monopoly with a horizontal marginal cost schedule. If a tax t is imposed on the monopolist, show that:

(a) Price increases by exactly half the tax if the monopolist faces a linear demand curve p = a - bQ.

(b) Price increases by a multiple [1/(1 -/eta^d)] if the monopolist faces a demand schedule with constant elasticity eta^d. In both cases, provide also a graphical representation.

Reference no: EM132133700

Questions Cloud

Print high quality marketing materials brochures : BMO Inc sells commercial/industrial printers to businesses including creative marketing agencies that need to print high quality marketing materials brochures,

Why might education exhibit positive externalities : Why might education exhibit positive externalities? Describe a government policy to internalize the positive externality of education.

Secure preferred pricing on several products : The XYZ Co. has negotiated with their vendor and has been able to secure preferred pricing on several products they purchase from them, including this product.

What is the firm profit-maximizing price : Consider the market for a software application. There are 20 consumers who value technical support, which they can only receive if they purchase.

Discuss about the horizontal marginal cost schedule : Consider a monopoly with a horizontal marginal cost schedule. If a tax t is imposed on the monopolist, show that: Price increases by exactly half the tax.

Concept discussed reinforce need for effective communication : How might the outcome be different. How do the concepts discussed reinforce the need for effective communication?

Decisions must be made regarding air carrier fleet planning : What short-term and long-term management decisions must be made regarding air carrier fleet planning?

What is the expected net present value : Consider a project that requires an upfront payment of $500. Suppose there is a 70% percent chance that the project is moderately successful and generates.

How many units of each good towns a and b produce : Determine how many units of each good towns A and B produce and consume before trade opens up. Determine which good each town should specialize in producing.

User Account

All Pages