Massive Products, Inc., is a monopolist whose cost of production is given by 10Q + Q2 (so its marginal cost curve—equivalently, its inverse supply curve—is given by 10 + 2Q). Demand for Massive Products’ massive products is Q = 200 – 2P.
a. What price will the monopolist charge, and what profits will the monopolist earn? What will consumer surplus be?
b. How will the monopolist’s price and profits change if a tax of $15 per unit is imposed on the buyers of the product?
c. What is the deadweight burden of the tax?