Suppose Bedox is a patent drug for man’s beauty. Her manufacturer faces a market demand for Bedox of Q = 1,000 – 0.2P. She has a cost function of C = 300,000 – 1,000Q + 10Q2 . a. What is the profit-maximizing output level and price? What is the profit? Show your calculation.  b. Show the above results on a well-labeled diagram.  c. Suppose the government considers this “unfair to consumers” by allowing Bedox to charge such a high price. As such, the government has decided to impose a lump-sum tax of $200,000 on Bedox. Explain whether this policy can help alleviate the “unfairness to consumers”.

Question

Suppose Bedox is a patent drug for man’s beauty. Her manufacturer faces a market demand for Bedox of Q = 1,000 – 0.2P. She has a cost function of C = 300,000 – 1,000Q + 10Q2 . a. What is the profit-maximizing output level and price? What is the profit? Show your calculation.  b. Show the above results on a well-labeled diagram.  c. Suppose the government considers this “unfair to consumers” by allowing Bedox to charge such a high price. As such, the government has decided to impose a lump-sum tax of $200,000 on Bedox. Explain whether this policy can help alleviate the “unfairness to consumers”.

 

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Other

Related Economics Q&A

Find answers to questions asked by students like you.

Q: explain how the curve shift on a graph and why they shift

A: The demand and supply curves will shift on a graph when non-price factors influence them. For the de...

Q: Is a monopoly always undesirable? With a diagram.

A: A monopoly is a market condition that is characterized by the presence of a single seller in the mar...

Q: Suppose the market for cigarette is competitive. An economist estimates the price elasticity of dema...

A: a) The burden would be shared more by the group which is less elastic. This is because they cannot s...

Q: Question 1 The M1 definition of the money supply includes all of the following EXCEPT Select one: a....

A: M1 is the most liquid form of money supply. This includes Currency in circulation, travellers checks...

Q: a. List three factors that will shift the demand curve for sugar and three factors that will shift t...

A: Three factors that can shift the demand curve of the sugar are: 1. Price of the related goods - Pric...

Q: Question 2 For each of the following scenarios, state whether the unemployment is frictional, struct...

A: Structural unemployment arises when someone lacks skill which is required in any area for job/employ...

Q: Q30 The theory of consumer choice   underlies the concept of the supply of a particular good.   ...

A: The theory of consumer choice examines how consumers make utility-maximizing decisions. The theory o...

Q: A consumer has income of $15,000. Masks costs $35 per mask, and sanitizers costs $70 per bottle.   ...

A: Since you have asked multiple questions, we will solve the first question for you. If you want any s...

Q: If real GDP per capita in the United States is $8,000, what will real GDP per capita in the United S...

A: Given information: Real GDP = $8,000 Growth rate = 3.2% Number of years = 5

Q: What is long run and short run production? What is immediate market period

A:   Meaning of Production: The term production refers to the situation under which the manufacturer ta...

Q: a. Define economies of scale and explain why they might arise. Definediseconomies of scale and expla...

A: Note:  We’ll answer the first question since the exact one wasn’t specified. Please submit a new que...

Q: 32. A decrease in the price of a fixed factor of production decreases total cost and A. decreases ...

A: (32) A decrease in the price of a fixed factor of production decreases total cost and A. decreases...

Q: 7. Compute for the number of blocks that an ice plant must be able to sell per month to break-even b...

A: Hi, thanks for the question. As per the guidelines we are allowed to attempt the first question. If ...

Q: Explain, using the AD‐AS model, how the South African Government can use fiscal policy as a tool to ...

A: Fiscal policy refers to the changes in federal government purchases and taxes. Expansionary fiscal p...

Q: a. Is a typical AD curve downward sloping? Explain your answer. b. Suppose an economy is at the shor...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: Colonizers were more likely to ____  the power of government if they intended a long-term stay in th...

A: Hi, thanks for the question. As per the guideline we are allowed to attempt the first question. If y...

Q: Consider a firm that utilizes Labor (L) and Capital (K) to produce a product Q, and the technology i...

A: Iso-quant curve show the different possible combinations of input that produces the same level of ou...

Q: Can you think of an industry (or product) with near-infinite elasticity of supply in the short term?...

A: Near infinite elasticity of supply means that a small change in price leads to a large change in qua...

Q: Suppose there are three goods in an economy, namely pencils, mobile phones and capital goods for pro...

A: Click to see the answer

Q: Write an introductory introduction on economics and marketing?

A: Answer - Introduction of economics:- Economics is  file which help us understand the uses of resourc...

Q: Federal payroll taxes to fund the EI program are levied at a combined rate of 1.58 percent up to an ...

A: There are usually three kinds of taxes that are levied by the state  Progressive tax - This is the k...

Q: Describe each of these two types of inflation. text are cost-push inflation and demand-pull i...

A: Demand-pull inflation- Inflation is defined as an increase in the general price level of an economy....

Q: Melvin manufactures a single product. Total cost per unit is $70 when production is 100 units per we...

A: Total cost per unit if production is 100 units per week = $70 Total cost of 100 units per week = $70...

Q: Please answer my as possible as you can    Thank you

A: We have the following information- Deposit made to bank (Mo)= $42,000 reserve ratio= 50% or 0.50

Q: Explain, using the AD-AS model, how the South African Government can usefiscal policy as a tool to r...

A: Fiscal policy refers to the changes in federal government purchases and taxes. Expansionary fiscal p...

Q: QUESTION 1 The weekly income and leisure information in the table below belongs to the indifference ...

A: Click to see the answer

Q: A publisher faces the following demand schedule for the next novel from one of its popular authors:P...

A: Table, The total revenue =TR = P*Q The marginal revenue = MR = Change in TR /Change in Q At P = 90,...

Q: a) What is the equilibrium wage rate and equilibrium level of employment? A. $15 and 35 units of la...

A: Perfect competition refers to the situation where there are large number of prouder and consumers ar...

Q: Eleanor spends all of her money on comic books and donuts. In 2012, she earned $15.00 per hour, the ...

A: x- comic book y- donut Budget constraint: 5x + 3y = 15

Q: Question 6 If the money multiplier is 3.5, a $10 billion increase in the monetary base Select one: a...

A: Given, money multiplier = 3.5 Monetary base = $10 billion  

Q: Question 20. 20  Refer to the information and assume the stadium capacity is 5,000.  The supply of s...

A: The supply refers to the quantity of goods and services sold at a certain price of a product in the ...

Q: A multi-plex theatre area is experiencing a decline in the number of tickets sold, falling revenues,...

A: Click to see the answer

Q: antify of soybeans (bushels) antity abor (workers) 25 45 3. 4 75 21-2 Table: Production Function for...

A: Total cost is the sum of fixed cost and variable cost. 

Q: Suppose that a paper mill “feeds” a downstream box mill. For the downstream mill, the marginal profi...

A: Marginal revenue refers to the additional revenue that obtained by increasing one more unit of labor...

Q: 69. In a perfectly competitive market, industry demand is given by Q = 1000 – 20P. The typical firm’...

A: According to the question the industries demand function is given by Q = 1000 – 20P And, TC = 300 + ...

Q: 12. In the nation of Transporta, the income elasticity of demand for used cars is -2.66. So when inc...

A: 12. Option A Income Elasticity of Demand = % Change in Quantity Demanded / % Change in Income Pluggi...

Q: Solve part iii - What is the marginal revenue for the 8th lesson? $__

A: Answer to the question is a follows :

Q: Ball Bearings, Inc. faces costs of production as follows:Table 1: Ball Bearing Inc. Production Costs...

A: Average Fixed Cost = Fixed Cost / Quantity Average Variable Cost = Variable Cost / Quantity Marginal...