What effect will tax have on price the monopolist charges

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Reference no: EM13898584

A local video rental monopolist faces the weekly demand function D(P)= 1000-100P

The marginal cost of a rental is $4. Suppose the town government places a $1 tax on all video rentals.

Instructions: Round your answers to 2 decimal places.

a. What effect will the tax have on the price the monopolist charges?

The tax will increase the monopolist's price by $.

b. What share of the tax do consumers bear?

Reference no: EM13898584

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