A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per unit. Assume that the firm faces no fixed cost. You may wish to arrive at the answers mathematically, or by using a graph (the graph is not required to be presented), either way, please provide a brief description of how you arrived at your results. d) Suppose a tax of $1,000 per day is imposed on the firm. How
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d) Suppose a tax of $1,000 per day is imposed on the firm. How will this affect its
e) How would the $1,000 per day tax affect its output per day?
f) How would the $1,000 per day tax affect its profit per day?
g) Now suppose a tax of $100 per unit is imposed. How will this affect the firm’s price?
h) How would a $100 per unit tax affect the firm’s profit maximizing output per day?
i) How would the $100 per unit tax affect the firms profit per day?
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