SOLUTION: A monopoly firm has Demand: P = 20 - 2 y
Cost: C = y^2 + 5y
Tax by t per unit output imposed. Find
(a) Equilibrium price and quantity and show that the production quantity is de
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Question 1162506: A monopoly firm has Demand: P = 20 - 2 y
Cost: C = y^2 + 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(52876) (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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