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3.5 If the inverse demand curve is p = 120 - Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of t = 10 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? (Hint: See Solved Problem 11.59.) M

3.5 If the inverse demand curve is p = 120 - Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of t = 10 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? (Hint: See Solved Problem 11.59.) M

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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3.5 If the inverse demand curve is p = 120-Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of t = 10 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? (Hint: See Solved Problem 11.50.) M
Transcribed Image Text:3.5 If the inverse demand curve is p = 120-Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of t = 10 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? (Hint: See Solved Problem 11.50.) M
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