Question: Question 2 ) ( 6 points ) Consider the High West question from the notes. Recall the price of each bottle was p ( y
Question points Consider the High West question from the notes. Recall the price of each bottle was py y and the cost of producing y bottles of whiskey is Cyy
Now suppose that the government taxes High West at $ per bottle of whiskey. Rewrite High Wests profit function, taxy to account for the taxes they pay.
If the tax is accounted for as a cost, what is High Wests new marginal cost?
What is High Wests new profit maximizing quantity of whiskey? Is it higher or lower than the pretax
quantity, why might this be the case?
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