Consider the setting of Problem 5. a. Suppose the government puts a $2 per cubic yard tax

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Consider the setting of Problem 5.
a. Suppose the government puts a $2 per cubic yard tax on the monopolist's product, paid by the monopolist. What happens to the price consumers pay? What share of the tax is this?
b. What price subsidy would get the monopolist to sell the same quantity as if it were a price-taking firm (the quantity that maximizes aggregate surplus in the market)?
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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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