6) Now suppose the firm in question 7 has the original demand and there is no license fee. Also, the firm is a revenue maximizing firm rather than a…

6)     Now suppose the firm in question 7 has the original demand and there is no license fee. Also, the firm is a revenue maximizing firm rather than a profit maximizing firm.

a.      Find the output that maximizes its revenue and the price it will charge at that revenue? Is it making a profit or a loss? (2 points)

b.      If it must make at least a profit of 0, what output will it produce, and what price will it charge? (2 points)

c.      Ignoring the profit constraint, if the state taxes the firm at a rate of 0.2 per unit of output, so there is an additional cost of 0.2q what will happen to the firm’s output and price in the short run? Explain.

Please explain so that I may come to the answer myself

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