Exercise A.14.Use a revealed preference argument to show that a per unit tax imposed on a monopoly causesthe quantity to fall. That is, hypothesize quantities q, before the tax, and qa after the tax, andshow that two facts - the before tax monopoly preferred qb to qa and the taxed monopoly madehigher profits from qb together imply qb ≥ qa

Per unit tax on a monopoly would imply : Taking original marginal cost as 'MC' & after tax…

Use a revealed preference argument to show that a per unit tax imposed on a monopoly causes the quantity to fall. That is, hypothesize quantities qb before the tax, and qa after the tax, and show that two facts - the before tax monopoly preferred qb to qa and the taxed monopoly made higher profits from qb together imply qb 2 qa

Use a revealed preference argument to show that a per unit tax imposed on a monopoly causes the quantity to fall. That is, hypothesize quantities qb before the tax, and qa after the tax, and show that two facts - the before tax monopoly preferred qb to qa and the taxed monopoly made higher profits from qb together imply qb 2 qa

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.8P

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Define monopoly and it's limitations. Pls don't copy