Consider a Single-Price Monopolist That Is in Equilibrium at Output

question 110

Multiple Choice

Consider a single-price monopolist that is in equilibrium at output level Q* and price P*.If the government imposes a new tax on the firm of $25 per unit of output,then

• A)output and price will remain at Q* and P*
• B)output will fall and price will rise by $25
• C)output will fall and price will fall by less than $25
• D)output will rise and price will fall by $25
• E)output will fall and the price will rise by less than $25

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