b) Consider the following demand and cost functionsP = 25 – 3QTC = Q² + 6QSuppose the government imposes a per unit tax 't' on all products produced by the firm and thatthe total tax T collected is a function of output. Therefore, T = tQ. Determine:i. The quantity of output that maximizes profit.ii. The tax rate 't' that maximizes total tax.The maximum 'tax T.

Profit maximization refers to the production and distribution of goods in such a way that maximizes…

b) Consider the following demand and cost functions TC = Q² + 6Q P = 25 – 3Q Suppose the government imposes a per unit tax 't' on all products produced by the firm and that he total tax T collected is a function of output. Therefore, T = tQ. Determine: i. The quantity of output that maximizes profit. ii. The tax rate 't' that maximizes total tax. The maximum 'tax T.

b) Consider the following demand and cost functions TC = Q² + 6Q P = 25 – 3Q Suppose the government imposes a per unit tax 't' on all products produced by the firm and that he total tax T collected is a function of output. Therefore, T = tQ. Determine: i. The quantity of output that maximizes profit. ii. The tax rate 't' that maximizes total tax. The maximum 'tax T.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 20P

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