Suppose that a monopolist sells a product to consumers with an aggregate demand that is downward sloping in quantity, D(Q) = 200 - 2Q. The total cost of producing Q units is C(Q) = 20Q + 2Q2. Instead of a specific tax, an ad valorem tax, of 1/6 is imposed i. What price-quantity pair would we expect? ii. What are CS, PS, T, and W? iii. What is deadweight loss?

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cyangnat69Lv1

28 Sep 2019

Suppose that a monopolist sells a product to consumers with an aggregate demand that is downward sloping in quantity, D(Q) = 200 - 2Q. The total cost of producing Q units is C(Q) = 20Q + 2Q².

Instead of a specific tax, an ad valorem tax, of 1/6 is imposed

i. What price-quantity pair would we expect?

ii. What are CS, PS, T, and W?

iii. What is deadweight loss?

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Darryn D'SouzaLv10

28 Sep 2019

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1) Taxing a monopoly (20 Points) Suppose that a monopolist sells a product to consumers with an aggregate demand that is downward sloping in quantity, D(Q) = 200 â 2Q. The total cost of producing Q units is C(Q) = 20Q + 2Q2 .

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