A Profit-Maximizing Monopolist Has the Cost Schedule C(y) = 20y

question 67

Multiple Choice

A profit-maximizing monopolist has the cost schedule c(y) = 20y. The demand for her product is given by , where p is her price. Suppose that the government tries to get her to increase her output by giving her a subsidy of $15 for every unit that she sells. Giving her the subsidy would make her

• A) decrease her price by $7.50.
• B) decrease her price by $15.
• C) decrease her price by $20.
• D) decrease her price by $35.
• E) leave her price unchanged.

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Definitions:

Domestic Producers

Companies or individuals that manufacture or produce goods and services within their home country, as opposed to importing them from abroad.

Tariffs and Quotas

These are trade policies where tariffs are taxes on imported goods, and quotas are limits on the amount of a good that can be imported.

Import Substitution

An economic policy aimed at replacing foreign imports with domestic production to promote local industries.

Foreign Competition

Competition that domestic companies face from companies located in other countries, influencing markets, pricing, and innovation.