A firm faces the following average revenue (demand) curve:
P = 100 – 0.01Q
Where Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 50Q + 30,000. Assuming the firm maximizes profits,
a. What is the level of production, price, and total profit per week?
b. If the government decides to levy a tax of 10 cents per unit on this product, what will be the new level of production, price, and profit?