Local monopolist of ready-mix concrete

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Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is Qd= 24000-400P where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is MC=20+0.0075Q

The monopolist maximizes profit with an output of 3200 units and a price of $52.00.

a. Suppose the government puts a $2 per cubic yard tax on the monopolist’s product, paid by the monopolist. What happens to the price consumers pay? What share of the tax is this?

Reference no: EM13898583

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