題組內容

一、(50%) 1. (5%) Consider a profit-maximizing monopolist faces the inverse demand function \( P(y) = \alpha - \beta y \) with \( \alpha, \beta > 0 \), and has the total cost function \( C(y) = cy \) with \( 0 < c < \alpha \), where \( y \) is the output amount. Suppose the government imposes a quantity tax of $4 per unit of output on this monopolist. Then, the equilibrium price will increase      (1a)      and the equilibrium quantity will decrease      (1b)     .

ab