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.

Recognize the factors that lead to the efficiency of the market system, including specialization and division of labor.

Explain the concept of laissez-faire capitalism and its significance within a market economy.

Understand the distinctions between market and command economies, including their impacts on economic outcomes.

Analyze the influence of government and political hierarchy in different economic systems.

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