If a monopolist produces q units, she can charge 400 – 4 q dollars per unit. The variable cost is $60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b , use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.

Q: Expert Answer

a) Summary Introduction To determine: The way the profit can be maximized. Non-linear programming (NLP): Non-linear programming (NLP) is used in complex optimization problems where the objectives or constraints or sometimes both are non-linear functions of the decision variables. A model can be termed as non-linear for more than one reason. Explanation Model: Formula: b) Summary Introduction To determine: If the monopolist will increase or decrease the production. c) Summary Introduction To use: The solver table to study how the change of sales tax affects the optimal solution.

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BuyFind

Practical Management Science

6th Edition

WINSTON + 1 other

Publisher: Cengage,

ISBN: 9781337406659

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Answer 3

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Chapter

Section

Answer 4

Chapter

Section

Answer 5

a)

Summary Introduction

To determine: The way the profit can be maximized.

Non-linear programming (NLP):

Non-linear programming (NLP) is used in complex optimization problems where the objectives or constraints or sometimes both are non-linear functions of the decision variables. A model can be termed as non-linear for more than one reason.

Explanation of Solution

Model:

Formula:

Answer 6

b)

Summary Introduction

To determine: If the monopolist will increase or decrease the production.

Answer 7

c)

Summary Introduction

To use: The solver table to study how the change of sales tax affects the optimal solution.

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