If cost function is C=10+2q+q^2, price is p=10. The optimal quantity produced at p=10 is q=4. Now suppose a tax of $2 per unit is levied on a firm.
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If cost function is C=10+2q+q^2, price is p=10. The optimal quantity produced at p=10 is q=4. Now suppose a tax of

$2 per unit is levied on a firm.What is the post-tax optimal quantity produced in the short run (price p=10 remains same)? And what is the change in profits after a $2 per unit tax is assessed on the firm? (Provide the difference between post-tax and pre-tax values. Use positive number for an increase and negative number for a decrease.)

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