Questions:
Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P = 50 - 0.4Q. The seller can produce handbags for a constant marginal and average total cost of $10.
A) Calculate the profit - maximizing price for this seller.
B) Suppose the government levies a $4 tax per unit on sellers of handbags.Calculate how this tax will affect the price the monopolist charges its customers
C) Who bears the burden of this tax?