A monopolist's cost function is
TC(q) =0 if q = 0
100q + F if q > 0.
It faces the demand function p = 300 - 5q. How much does the monopolist produce (as a function of F )? What is the price? What is the monopolist's profit?
Now suppose the firm has to pay a lump sum tax of T.
What would be the impact on the monopolist's profit maximising output?
Would your answer change if it was a % tax?