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Possible schemes for taxing a monopoly

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Reference no: EM131515636

Microeconomics-Monopoly

Consider the following possible schemes for taxing a monopoly:

i. a proportional tax on profits

ii. a tax on each unit produced

iii. a proportional tax on the gap between price and marginal cost.

a. Explain how each of these taxes would affect the monopolist's profit maximising output choice. Would the tax increase or decrease deadweight loss from monopoly?

b. Graph your results for these three cases

Reference no: EM131515636

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