Suppose a firm's total cost function is given by TC = 100 + 4Q + 0.02Q^2, where
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Question:
Suppose a firm's total cost function is given by TC = 100 + 4Q + 0.02Q^2, where Q is the quantity of output produced. The firm faces a market price of $10 per unit.
a) Calculate the profit-maximizing level of output and the corresponding profit.
b) Suppose the government imposes a tax of $1 per unit sold on this market. Calculate the new profit-maximizing level of output, the amount of the tax revenue collected by the government, and the after-tax profit of the firm.
Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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