4.Give an economic interpretation of the welfare loss caused by the $30 tax on the phone ser- vices market. Would this interpretation be different if the loss is caused by the monopoly? Justify. please answer the last one, since the first three have been solved.
A country that ends a 22-year old state
The phone
Demand: p = 80−q
MC: p=−40+2q
1.Draw the the demand, the MR and the MC of the monopolist in the following graph.
2.Suppose a state monopoly on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation.
3.Now consider the situation after the abolition of the state monopoly. With the phone services market now competitive, the state is losing customers, and therefore also losing revenue as a result of new companies entering the market. To compensate for the drop in revenue, the government decides to impose an excise tax of $30 on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation.
4.Give an economic interpretation of the welfare loss caused by the $30 tax on the phone ser- vices market. Would this interpretation be different if the loss is caused by the monopoly? Justify.
please answer the last one, since the first three have been solved.
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