Question: 3.7 Beta Laundrys pre-tax cost function is C(q) = 30 + 20q + q2, so its marginal cost function is MC = 20 + 2q.

3.7 Beta Laundry’s pre-tax cost function is C(q) = 30 + 20q + q2, so its marginal cost function is MC = 20 + 2q.

a. What quantity maximizes the firm’s profit if the market price is p? How much does it produce if p = 60?

b. If the government imposes a specific tax of t = 2, what quantity maximizes its after-tax profit? Does it operate or shut down? (Hint:

See Solved Problem 8.2.) A

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