Question: A local video rental monopolist faces the weekly demand function D (P) = 1,000 - 50P. The marginal cost of a rental is $1. Suppose

A local video rental monopolist faces the weekly demand function D (P) = 1,000 - 50P. The marginal cost of a rental is $1. Suppose the town government places a $1 tax on all video rentals. What effect will the tax have on the price the monopolist charges? What (dollar) share of the tax do consumers bear?

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The tax will increase the monopolists priceby 50 The customers bear 050 of the tax Explanation A mon... View full answer

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