Business-level strategy focuses primarily on a. which markets to enter and how to use the firm's money, people, and physical fac
1 answer:
You might be interested in
Answer:
Explanation:
A monopolist Inverse Demand Curve is Given as: P=24-Q
And we are also Given the Marginal Cost (MC) = $6
The Revenue of the Monopolist would be:
R=PXQ = 24Q - Q
Marginal Revenue= 24-2Q
A) Monopolist would produce at the price corresponding to the quantity of : MR=MC
24 – 2Q = 6
20 = 24 – 6 = 18
Q = 9
SO the Profit maximizing price would be: P=24-Q = 24-9 = 15
Thus profit maximizing price and Quantity are: P^*= $15 and Q^*=9
Profit = Revenue - Cost
Cost = Average Cost * Quantity = 6Q
Profit = 24Q-Q2-6Q = 18Q - Q2 = 18 X 9 -9
Profit = 81
Part B::
Now Government imposes a tax, on this monopolist, T.
So new MC= 6+T
Lets solve for Profit maximizing Price:
MR=MC
24-2Q=6+T
Q=\frac{18-T}{2}
and Price:
P=24-Q = 24-\frac{18-T}{2}
P=15+\frac{T}{2}
Thus Now the monopolist would charge Half of this tax from consumers.
