Purchase Solution

Tax and monopoly

Not what you're looking for?

Ask Custom Question

A per-unit tax t>0 is levied on the output of a monopoly. The monopolist faces demand q=p^-e, e>1, and has constant average costs. Show that the monopolist will increase price by more than the amount of the per-unit tax.

Purchase this Solution
Solution Summary

Tax and monopoly issues are clearly explained.

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Encouraging a Monopoly to Social Efficiency

    Explain how this tax or subsidy would achieve the socially efficient level of output. Among the various interested parties - the monopoly firm, the monopoly's consumers, and other taxpayers - who would support the policy and who would oppose it?

  • equilibrium demand price level

    j) What is the equilibrium quantity in the monopoly market when this 20 unit tax is imposed? Please see attachment for (k), (l) and (m) Please see the attached file. This job explores equilibrium demand price level.

  • Multiple choice firm profitability questions

    . state tax d. marginal propensity 6.Two key features of monopoly are a. no close substitutes and barriers to entry b. legal protection and no close substitutes c. electric companies and cable companies d. control of the resources and barrier

  • Government Can Prevent Monopolies

    Literature is scant in pointing out that specific taxes can control monopoly (1). For example commodity taxes such as excise duty and sales tax can be used to control monopoly.

  • Profits in monopoly and perfectly competitive environment

    e.What is the monopoly price? f.What are profits at the monopoly price? g.Suppose marginal cost increases to 25 as a result of the imposition of a tax. What happens to the monopoly and competitive price and output?

  • Monopoly Concepts and other Competition related concepts

    260788 Monopoly Concepts and other Competition related concepts A natural monopoly exists whenever a single firm ______.

  • Monopoly and Microeconomics: Potato Chip Industry and Benefit to Stakeholders

    468644 Monopoly and Microeconomics: Potato Chip Industry and Benefit to Stakeholders In 2007, the potato chip industry in the Northwest was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and

  • Natural Monopolist: Profit Maximizing Price and Output

    Which is the best method of controlling monopoly power? Why? The best method is applying a lump sum tax, it will encourage the monopolist to produce at the optimum allocation of resources and no economic profits.

  • Economics, Markets, Supply and Demand, Cartels

    Monopsony -Monopoly -Average revenue and marginal revenue -The Monopolist's output decision -An Example -A rule of thumb for pricing -Shifts in demand -The effect of a tax -The Multiplant firm Monopoly Power: -Measuring Monopoly power -The

View More Related Solutions