3. Megacorp has a monopoly patent on the drug Remisol. They have no fixed costs, and it costs $236 to make each Remisol no matter how many they make. Research shows that sales increase 200 units for every $10 decrease in price. They sell 2,480 / year at a price of $360 each. e. Find Megacorp monopolisVs inverse demand function p f (Q). (4 marks) The import tariff on Remisol's primary input has been eliminated. As a consequence, it costs $160 to make each Remisol now. f. How much will Megacorp's annual profits change by? (6 marks) To curb the 'excessive' profits, the government imposes a $60 per unit tax on Remisol. g. Find Megacorp's annual profits with the $60 per unit tax. (6 marks) An ad valorem tax is a tax on the percentage of the selling price rather than a fixed amount eg the goods and services tax GST is 10% of the price. So, the price to the buyers, pe relative to the price to Megacorp is PB (1 + t)pM where t is the ad valorem tax rate. h. Find the ad valorem tax rate t that that gives the monopolist the same profits as the profits with the per unit tax in part c). (8 marks) Do welfare analysis to determine whether Australia is better off, worse off, orthe same with the ad valorem tax compared to the per unit tax. Note: there are no externalities. (8 marks)