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 price?

A) $90.00
B) $10.00
C) $55.00
D) $52.50

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 price?A)  $90.00B)  $10.00C)  $55.00D)  $52.50

Maggie Salmons · Accepted Answer

Final Answer : C, Explanation :  With a $5 tax, the new MC becomes 10. Setting MR = MC: 100 - Q = 10, Q = 90. Substitute Q = 90 into the demand equation: 90 = 200 - 2P, solving gives P = $55.00.

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 price?

A) $90.00
B) $10.00
C) $55.00
D) $52.50

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