Microeconomic monopoly, Microeconomics

Assignment Help:

A monopolist faces the following demand function for its product: Q = 45 - 5P

The fixed costs of the monopolist are $12 and the variable costs are $5 per unit.
a) What are the profit-maximizing price and quantity? What will be the profits at these price and output levels?

b) If the government imposes an annual tax on the firm of $10, what will be the profit-maximizing price, output, and profits? Who bears the burden of the tax? Why? (Distinguish short run and long run).

c) If, instead of the annual tax, the government imposes an excise tax of 50 cents per unit of output sold, what is the impact on the profit-maximizing price, output, and profits? Who bears the burden of tax? Why?

c) If, instead of the annual tax, the government imposes a ceiling $6 on the price of the firm's product, what output will the firm produce, and what will be the total profits? What is the impact of the price ceiling on 'market efficiency'? (Hint: Compare the quantity produced under monopoly without price ceiling with quantity produced with price ceiling, and with quantity that would be produced by a perfectly-competitive firm).

e) Calculate the consumer surplus under each of the following alternatives:
* Monopoly without tax and without price ceiling
* Monopoly with tax of 50 cents per unit
* Monopoly without tax, but with price ceiling of $6
* Perfectly competitive inudstry

Illustrate your answers with diagrams whenever appropriate.


Related Discussions:- Microeconomic monopoly

Profit maximisattion, argument against in favour of traditonel theory prof...

argument against in favour of traditonel theory profit maximisation

Economic theory, Much of undergraduate macroeconomic theory is discussed on...

Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic agents about the future values of macroeconomic varia

Deefine production, Normal 0 false false false EN-IN ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Market supply of labour, #queUse a graphical illustration to describe brief...

#queUse a graphical illustration to describe briefly what the influence of each of the following would be on the market supply of labor:(a) an increase in immigration (b) more wome

Explain about contingent valuation, Q. Explain about Contingent valuation? ...

Q. Explain about Contingent valuation? Evaluation of willingness to pay for a specified environmental resource or a change in the resource, through use of structured questionna

Labor , #questThe demand for and supply of labour in a certain industry are...

#questThe demand for and supply of labour in a certain industry are given by the equations Nd = 400 - 2w Ns = 240 + 2w Where Nd ( is the number of workers employers want to hire

Competitive short run supply curve of firm and industry, A Competitive Shor...

A Competitive Short Run Supply Curve of Firm * Observations: - P = MR - MR = MC - P = MC * Supply is amount of output for every possible price.  Thus: -  If

Production possiblities curve, suppose either computers or televisions can ...

suppose either computers or televisions can be assembled with the following labor inputs: units produced: 1 2 3 4 5 6 7 8 9 10 total labor used: 3 7 12 18 25 33 42 54 70 90 Draw th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd