A monopoly firm faces a demand curve given by the following equation: P

= $500 −
A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q,
where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per unit. Assume
that the firm faces no fixed cost. You may wish to arrive at the answers mathematically, or
by using a graph (the graph is not required to be presented), either way, please provide a
brief description of how you arrived at your results.a) How much will the firm produce?b)
How much will it charge?c) Can you determine its profit per day? (Hint: you can; state how
much it is.)d) Suppose a tax of $1,000 per day is imposed on the firm. How will this affect
its price?e) How would the $1,000 per day tax affect its output per day?f) How would the
$1,000 per day tax affect its profit per day?g) Now suppose a tax of $100 per unit is
imposed. How will this affect the firm’s price?h) How would a $100 per unit tax affect the
firm’s profit maximizing output per day?i) How would the $100 per unit tax affect the
firms profit per day?****************************Reading AssignmentPrinciples of
Economics by Libby Rittenberg and Timothy Tregarthen.Chapter 10: Monopoly which can
be downloaded here:Principles of Economics Chapter 10Please read the chapter entirely. It
is usually a good idea to take good notes while reading for later review or discussion. You
may also want to keep any questions in mind you want to ask your instructor. Skimming the
material only will result in confusion; therefore, it is in your own best interest to read the
text carefully and with attention. To test your understanding of the material, please refer to
the learning objectives at the beginning of the chapter and see if you can answer them
without going back to the material. If not, please consider going back to the reading material
to review as appropriate.Suggested reading: Introduction to Economic Analysis, pp. 204 –
216.Video ResourcesKhan Academy. (2019, March 15). Monopolies vs. perfect competition |
Microeconomics | Khan Academy [Video]. YouTube.Khan Academy. (2019, March 15).
Economic profit for a monopoly | Microeconomics | Khan Academy [Video]. YouTube.