Question

A firm faces the following demand and total cost schedules, with all quantities listed on a per-month basis. Suppose that it is required to produce a whole number of items each month.


a. How much does the firm produce, and at what price? How do you know?
b. Suppose that the firm is subject to an excise tax of $5 per item sold. How much does it produce, and at what price? How do you know?
c. Suppose, instead, that the firm is subject to a tax of $20 per month, regardless of how much it produces. How much does it produce, and at what price? How do you know?
d. Suppose, instead, that the firm is subject to a tax of $25 per month, regardless of how much it produces. How much does it produce, and at what price? How do youknow?


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  • CreatedJanuary 24, 2013
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