A Monopolist Faces Linear Inverse Demand $P = a - b Q$

question 56

Multiple Choice

A monopolist faces linear inverse demand $P = a - b Q$ and constant marginal cost, $c$ . The term $a$ increases by amount $\Delta a$ . By how much does the monopolist's optimal price increase?

• A) \(\Delta a\).
• B) \(\Delta a / 2\).
• C) \(\Delta a - c\).
• D) \(\Delta a / b\).

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