A local video rental monopolist faces the weekly demand function D(P)= 1000-100P
The marginal cost of a rental is $4. Suppose the town government places a $1 tax on all video rentals.
Instructions: Round your answers to 2 decimal places.
a. What effect will the tax have on the price the monopolist charges?
The tax will increase the monopolist's price by $.
b. What share of the tax do consumers bear?
$.