Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?

A) 0
B) 90
C) 95
D) 100
E) none of the above

Question

Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?A)  0B)  90C)  95D)  100E)  none of the above

Carly kichler · Accepted Answer

Final Answer : B, Explanation :  To find the profit-maximizing level of output for a monopolist after a tax is imposed, we need to equate the marginal revenue (MR) to the new marginal cost (MC), which now includes the tax. The original MC is $5, and with a $5 tax, the new MC becomes $10. The MR equation is given as MR = 100 - Q. Setting MR equal to the new MC gives us 100 - Q = 10. Solving for Q gives us Q = 90.

Refer to Scenario 10.2. Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?

A) 0
B) 90
C) 95
D) 100
E) none of the above

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