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In: Economics

. A monopolist has a cost function given by c(y) = 0.5y 2 and faces a...

. A monopolist has a cost function given by c(y) = 0.5y 2 and faces a demand curve given by P(y) = 120 − y.

What is its profit-maximizing level of output? What price will the monopolist charge?

• If you put a lump sum tax of $100 on this monopolist, what would its output be?

• If you wanted to choose a price ceiling for this monopolist so as to maximize consumer plus producer surplus, what price ceiling should you choose?

• Suppose that you put a specific tax on the monopolist of $10 per unit output. What would its profit-maximizing level of output be?

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Expert Solution

Rahul Sunny answered 7 months ago
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