A Profit-Maximizing Monopoly Faces an Inverse Demand Function Described by the Equation

question 41

Multiple Choice

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 40 - y and its total costs are c(y) = 7y, where prices and costs are measured in dollars. In the past it was not taxed, but now it must pay a tax of 6 dollars per unit of output. After the tax, the monopoly will

• A) increase its price by 6 dollars.
• B) increase its price by 9 dollars.
• C) increase its price by 3 dollars.
• D) leave its price constant.
• E) None of the above.

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Definitions:

Aging of Accounts Receivable

A method to categorize and manage accounts receivable based on how long an invoice has been outstanding, helping businesses identify delays in payments.

Maturity Value

The amount payable to an investor at the end of a fixed-term investment, including the principal and any interest accrued.

Notes Receivable

Claims against debtors documented by promissory notes, which promise the future inflow of cash.

Aging Schedule

A table or report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding.