This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: discovers a new production process that would lower its marginal cost by $1 per widget. Use a graph to show how much its producer surplus will increase if it adopts the new production process. 1 4. We know that for a competitively supplied good, the economic incidence of a tax is independent of the legal incidence. That is, a sales tax and an excise tax of equal magnitudes have exactly the same effects. Is the same thing true for a good supplied by a monopolist? Explain your answer. 5. Assume the demand for GM’s Hummer H2 is the following: P = 100,000 – 500Q. The total cost of production is the following: TC = 2,000,000 + 300Q 2 . Calculate the profitmaximizing price (P) and output level (Q), and the level of profit enjoyed by the firm. 2...
View
Full
Document
This note was uploaded on 03/14/2012 for the course ECON 2243 taught by Professor Henryfors during the Spring '12 term at Abant İzzet Baysal University.
 Spring '12
 henryfors

Click to edit the document details