## [answered] 1.(15 points)A company in a competitive market with a cost

There are two economics questions in the attach file, hope someone can help me sovle it, thank you!

1.(15 points)A company in a competitive market with a cost function C(q) = 100 + 10q ?q 2 + 1

q3 has learned that it will now have to face a specific tax of ? = \$10 (per unit). This specific tax

means that for every unit of output the firm sells it has to pay a tax of ? dollars. If the firm sells q

units, it pays a total tax of q? .

(a)(5 points)What is the firm?s cost function including the tax?

(b)(10 points)What is this firm?s short-run profit-maximizing output if the market price is

p? (Hint: the solution has to be expressed as a function of p and has to be defined for values that

make economic sense, e.g. only positive quantities.)

2.(30 points)A monopolist faces the inverse demand for its output:

monopolist also has a constant marginal and average cost of \$4/unit. p = 30 ? Q. The (a)(10 points)What is the monopolist?s profit-maximizing level of output? What is the

monopo- list?s profit at this level of output?

(b)(10 points)What is the consumer surplus? Show it in a graph along with the

monopolist?s equilibrium; label the monopolist?s equilibrium eM .

(c)(5 points)What would the competitive equilibrium be if the demand curve were the same

as the one faced by the monopolist and the market supply curve were equal to the

monopolist?s marginal cost, i.e. P = MC? Show this equilibrium in the same graph as

above and label it eC .

(d)(5 points)What is the gain in consumer surplus if this market were perfectly competitive

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