3) The perfectly competitive blank compact disc industry is in long-run equilibrium, selling blank discs for $5 apiece.

Question # 00079961 Posted By: echo7 Updated on: 07/06/2015 04:57 AM Due on: 08/05/2015
Subject Mathematics Topic General Mathematics Tutorials:
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3) The perfectly competitive blank compact disc industry is in long-run equilibrium, selling blank discs for $5 apiece. Now the government imposes an excise tax of $2 per disc produced.


  1. Show what happens to the price and output of discs in the short run.
  2. Now show the impact in the long run.
  3. Who pays the tax? (Note: Show quantities as Q1, Q2, etc.)

4) A monopoly firm has just taken over the blank compact-disc industry. There have been technological advances that have lowered production cost, but the monopoly firm charges a price greater than average total cost, even in the long run. As it turns out, the firm is still selling compact discs for $5. The government imposes an excise tax of $2 per disc produced.


  1. What happens to price?
  2. What happens to output?
  3. Compare your results to your answer in Problem 3 and explain.
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  1. Tutorial # 00074642 Posted By: echo7 Posted on: 07/06/2015 04:57 AM
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    $2 per disc produced. 1. Show what happens to the price and ...
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