wk3_pq - The Colorado College Department of Economics and...

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1 The Colorado College Department of Economics and Business Block 7 Econ 207 Practice Question set 3 1. The demand and cost functions of a profit maximizing monopolist are P = 304 – 2Q and C = 500+4Q+8Q 2 (a) Determine the equilibrium price, quantity and profits. (b) Bow suppose a 1000% unit tax (i.e.1000% of T = 10Q) is imposed on the monopolist by the government. Given this tax, now calculate the monopolist’s price, quantity and profit level. Also show the before and after tax equilibrium price and quantity using a graph. (c) Now starting from the initial situation suppose the objective of the monopolist is not to maximize profits but to maximize revenue. What is the price, quantity and profit for the monopolist with this objective. 2. The Fun-Land amusement Park is a 40-acre fun park full of rides, shows and shops. Fun-Land’s marketing segments its customer base into two parts: local patrons and tourists. Fun-Land assumes local patrons are more price sensitive than out-of-town
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This homework help was uploaded on 04/19/2008 for the course EC 207 taught by Professor Ghosh during the Spring '08 term at Colorado College.

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wk3_pq - The Colorado College Department of Economics and...

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