A Monopoly Has the Demand Curve Q = 10,000 -

question 34

Multiple Choice

A monopoly has the demand curve q = 10,000 - 100p. Its total cost function is c(q) = 1,000 + 10q. The government plans to tax the monopoly's profits at a rate of 50%. If it does so, the monopoly will

• A) increase its price by 50%.
• B) increase its price by more than 50%.
• C) recover some but not all of the tax it pays by increasing its price.
• D) not change its price or the quantity it sells.
• E) None of the above.

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Definitions:

Mexican Securities Market

The financial marketplace in Mexico where securities such as stocks and bonds are issued and traded.

National Security Commission

A government body tasked with evaluating and making recommendations on matters related to a nation's security and defense policies.

Mexican Stock Exchange

The primary securities marketplace in Mexico, where stocks, bonds, and other financial instruments are traded.

Statutory Insiders

Certain large stockholders, executive officers, and directors who are deemed insiders by the Securities Exchange Act of 1934.