Consider a Monopolist That Is Earning Profits in the Long

question 109

Multiple Choice

Consider a monopolist that is earning profits in the long run.If the government imposes a lump-sum tax on this monopolist (that is less than its profits) ,then

• A)output would decrease and price to consumers would increase.
• B)neither output nor price would change.
• C)the output would remain the same while price increased.
• D)the monopolist would cease production.
• E)new firms would enter the industry.

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Definitions:

Investing Activities

Refers to the spending of capital on assets with the expectation of generating future returns, such as purchasing property, equipment, or other companies.

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.

Indirect Method

A cash flow statement reporting approach that starts with net income then adjusts for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Operating Activities

Business actions directly related to the production and delivery of goods and services.