Why do consumers bear all of the burden of a tax

Reference no: EM13183769

Suppose a monopolist faces a demand curve given by P=200-4Q. Additionally, she has marginal costs given by MC=100 and total costs given by TC=25+100Q.

a) calculate the formulas for the monopolists' FC, VC, ATC, AVC, and AFC.

b) calculate the profit - maximizing choice of output, price, and profits.

Also, how come, in a perfectly competitive market, the burden of a tax is shared in the short run? Also, why do consumers bear all of the burden of a tax in the long run?

Reference no: EM13183769

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