# A monopoly firm faces a demand curve given by the following equation: P = $500 – 10Q, where Q…

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 day. 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 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?