Find the profit maximizing quantity of output of firm

Reference no: EM13244056

suppose you must design a tax on the monopoly. Letthe demand function be p = A - By.

Suppose you consider a sales tax of 10% on thismarket. Suppose that the firm has to pay the tax, as istypically the case with sales taxes. Hence, if the firmproduces quantity y of output, the price paid by consumers is p = A- By, but the price received by the firm is .9p = .9(A- By), wherethe .9 appears because the firm gets to keep only 90% of thepurchase price, paying the other 10% to the government in tax. Find the profit maximizing quantity of output for the firm,the price paid by consumers, the price received by the firm and thethe firm's profit.

Reference no: EM13244056

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