A monopolist has marginal cost of $30 and faces an inverse demand of P-90-3q. They choose price (p₁) and quantity (91) to maximize profit. Next, suppose the government institutes a $30 per-unit tax on the monopolist. The firm again chooses price (p₂) and quantity (92) to maximize profit. What is the change in price from p₁ to P2?

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Monopoly
Section: Chapter Questions
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A monopolist has marginal cost of $30 and faces an inverse
demand of P-90-3q. They choose price (p₁) and quantity (9₁)
to maximize profit. Next, suppose the government institutes a
$30 per-unit tax on the monopolist. The firm again chooses
price (p₂) and quantity (9₂) to maximize profit. What is the
change in price from p₁ to ₂?
Transcribed Image Text:A monopolist has marginal cost of $30 and faces an inverse demand of P-90-3q. They choose price (p₁) and quantity (9₁) to maximize profit. Next, suppose the government institutes a $30 per-unit tax on the monopolist. The firm again chooses price (p₂) and quantity (9₂) to maximize profit. What is the change in price from p₁ to ₂?
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