Illustrate what would be size of resulting deadweigh loss

Assignment Help Business Management

Reference no: EM13112617

Q. This is not a duplicate question. This question imposes an excise tax of $5 per dose on the monopolist which was not asked in the original question.

Suppose that the (inverse) market demand curve for a new drug, Adipose-Off, designed to painlessly reduce body fat, is represented by the equation P=100-2Q, where P is the price in dollars per dose and Q is the annual output. (The marginal revenue curve is thus given by the equation MR=100-4Q). Suppose also that there is a single supplier of the drug who faces a marginal cost, as well as average cost, of producing the drug, equal to a constant $20 per dose and the government levies an excise tax of $5 per dose on the monopolist. Illustrate what would happen to the monopolist's profit-maximizing output and price? Illustrate what would happen to consumer and producer surplus? Explain how much money would the government collect due to the tax? Illustrate what would be the size of the resulting deadweight loss relative to the competitive outcome? Illustrate what would the Lerner Index for the monopoly be?

Reference no: EM13112617

Questions Cloud

Determining biostats problem : A student conducted a study on the height and weight of adult males. She collected data from 40 adult males and found that average height is 68.34 inches with a standard deviation of 14.02 inches

Discuss implications of each in terms of marketing strategy : Illustrate what examples of the major types of buying situations do you see in the being case? Discuss the implications of each in terms of marketing strategy?

Determine the entropy of the system for the process : Assume that 120 grams of CH 3CH 2OH at 29 degree Celsius temperature is added with 250 grams of CH 3CH 2OH at 85 degree Celsius degree Celsius at constant pressure of atmosphere.

Computing binomial variable and hypothesis testing : A snack company distributes chips in bags labeled 6 ounces. The local Bureau of Weights and Measures randomly selects 50 bags of chips and obtains a sample mean of 5.9 ounces.

Illustrate what would be size of resulting deadweigh loss : Illustrate what would be the size of the resulting deadweight loss relative to the competitive outcome? Illustrate what would the Lerner Index for the monopoly be?

Is number of deaths from copd in group excessive : Death would be expected based on statewide mortality rates. Is the number of deaths from COPD in this group excessive?

Hypothesis testing for mean-proportion-critical value : Inspection of student data generated during pre/post treatment surveys shows that among 10 subjects, 7 had higher scores after an experimental treatment

Corporate income tax rates for businesses increase : The price of computer chips decreases significantly, enabling manufacturers of hard drives to produce more hard drives. How will this affect the market for hard drives?

Illustrate what are examples of external and internal change : Illustrate what are examples of external and internal change agents? Illustrate what role do change agents play in the execution of a road map for a strategic plan?

User Account

All Pages