Question 8 1) Explain the difference between a per unit tax and alump sum tax:2) Explain the difference between a subsidy and a tax.3) Show (graphically) what impact a per unit tax wouldhave on a monopoly. What would happen to the firms priceand quantity if a per unit tax was used.4) Show (graphically) what impact a lump sum tax wouldhave on a monopoly. Would the firm's price and quantitychange? Would the firm's profit change after the use ofthe tax?5) Show (graphically) what impact a per unit subsidywould have on a monopoly. What would happen to thefirms price and quantity if a per unit subsidy was used.6) Show a monopoly graph and show the elastic andinelastic zones are of the firm's demand curve. (You don'thave to show anything but P=AR=D and MR on this graph).7) Sometimes the government feels that they need toregulate a monopoly. They might try to tax the monopoly(which probably wouldn't work well) or they may decide tosplit the monopoly firm into two different competingbusinesses. Another idea would be to tell the monopolythat they can only earn a "fair return." Show what a fairreturn would look like graphically for the monopoly.8) Show a monopoly graph and show the area ofconsumer surplus, producer surplus and deadweight loss.If a lump sum tax was used on the monopoly would thearea of consumer surplus, producer surplus or deadweightloss change?

The “producers’ surplus” is the economic surplus that is earned by the producer, as a difference…

8) Show a monopoly graph and show the area of consumer surplus, producer surplus and deadweight loss. If a lump sum tax was used on the monopoly would the area of consumer surplus, producer surplus or deadweight loss change?

8) Show a monopoly graph and show the area of consumer surplus, producer surplus and deadweight loss. If a lump sum tax was used on the monopoly would the area of consumer surplus, producer surplus or deadweight loss change?

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 12PA

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