Monopolist profit maximization after tax and with price
ceiling
Consider a monopolist facing a market demand curve given by
q = 186- p(q). The monopolist’s fixed costs and variable costs are equal to Cf
= 2400 and C(q) = q2 /10 +10q, respectively ……..(in the latter equation its
actually q squared over ten plus ten q)
Calculate:
a) the monopolist’s price-quantity combination that
maximizes profits and the level of profits obtained;
b) the monopolist’s price-quantity combination that
maximizes profits in case a fixed tax T = 1000 is introduced and the level of
profits obtained;
c) the monopolist’s price-quantity combination that
maximizes profits in case a tax for each unit of product sold tq = 11 is
introduced, the amount paid in taxes and the level of profits obtained after
taxes;
d) the monopolist’s price-quantity combination that
maximizes profits in case a tax of the t? = 50% on the profit is introduced;
the amount paid in taxes and the level of profits obtained after taxes;
e) the monopolist’s quantity and profits in case the
government fixes a p = 90.
