Suppose that a monopolist sells a product to consumers with

Question

Suppose that a monopolist sells a product to consumers with an aggregate demand that is downward sloping in quantity, D(Q) = 200 - 2Q. The total cost of producing Q units is C(Q) = 20Q + 2Q².

a) Instead of a specific tax, an ad valorem tax, of 1/6 is imposed

i. What price-quantity pair would we expect?

ii. What are CS, PS, T, and W?

iii. What is deadweight loss?