SOLUTION: A monopoly firm has Demand: P = 20 - 2y Cost: C = y2 + 5y Tax by t per unit output imposed. Find (a) Equilibrium price and quantity and show that the production quantity is de

Question 1162336: A monopoly firm has
Demand: P = 20 - 2y
Cost: C = y2 + 5y
Tax by t per unit output imposed. Find
(a) Equilibrium price and quantity and show that the production quantity is
decreasing over t . (b) Maximum tax revenue and the value of tax to be imposed.
Answer by ikleyn(52861) (Show Source): You can put this solution on YOUR website!
.

The problem formulation is INCORRECT.

Tax is not imposed per unit output.

It is against the common logic and common rules of imposing tax.

Tax is imposed to the REVENUE.

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