If a monopolist produces qunits, she can charge 400 – 4q dollars per unit. The variable cost is $60 per unit.

a. How can the monopolist maximize her profit?

b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)?

c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.