The production function of a competitive firm is L = q - q2 + q3, where L is the only input of the firm and q is the output. And the input price is 1. Suppose that output price is Rs.1. What will the firm do if levy of Rs 0.5 is imposed on the firm? Suppose a profit tax of 25 percent is imposed on the firm. How much tax will the firm pay if output price is Rs. 1?

The production function of a competitive firm is L = q - q2 + q3, where L is the only input of the firm and q is the output. And the input price is 1. Suppose that output price is Rs.1. What will the firm do if levy of Rs 0.5 is imposed on the firm? Suppose a profit tax of 25 percent is imposed on the firm. How much tax will the firm pay if output price is Rs. 1?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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