The Long-Run Cost Function for LeAnn's Telecommunication Firm Is: C(q)

Essay

The long-run cost function for LeAnn's telecommunication firm is: C(q) = 0.03q². A local telecommunication tax of $0.01 has been implemented for each unit LeAnn sells. This implies the marginal cost function becomes: MC(q, t) = 0.06q + t. If LeAnn can sell all the units she produces at the market price of $0.70, calculate LeAnn's optimal output before and after the tax. What effect did the tax have on LeAnn's output level? How did LeAnn's profits change?