Question Three a) Suppose the average total cost (ATC) of a firm is given as 4 ATC = Q +-2 Find the output(Q) that minimizes marginal cost b) Consider the following average revenue and cost functions AR = 60 – 6Q TC = 10Q2 – 6Q + 30 Suppose the government imposes a per-unit tax on output Q such that tax function is given as T = tQ where t is the tax rate. Determine: i) The output that maximizes profit ii) Tax rate t that maximizes tax revenue iii) Total tax T iv) Maximum profit and price level

Question Three a) Suppose the average total cost (ATC) of a firm is given as 4 ATC = Q +-2 Find the output(Q) that minimizes marginal cost b) Consider the following average revenue and cost functions AR = 60 – 6Q TC = 10Q2 – 6Q + 30 Suppose the government imposes a per-unit tax on output Q such that tax function is given as T = tQ where t is the tax rate. Determine: i) The output that maximizes profit ii) Tax rate t that maximizes tax revenue iii) Total tax T iv) Maximum profit and price level

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 3E

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