Consider a monopolist who has a total cost curve of: TC=7q + (1/2) q². The market demand equation is Q_d=386-(1/2)P.

A) What are the equilibrium quantity, equilibrium price, and profits in this market?

B) Suppose that a unit tax of $1 is placed on the monopolist. What happens to the equilibrium quantity, equilibrium price, and profits? How much tax revenue does the government generate?

C) Suppose that the same unit tax of $1 is placed on consumers. What happens to the equilibrium quantity, equilibrium price, and profits? How much tax revenue does the government generate?

Answer rating: 100% (QA)

A To find the equilibrium quantity and price we need to find the monopolists profitmaximizing output ... View the full answer