A Profit-Maximizing Monopolist Has the Cost Schedule C(y) = 40y

question 14

Multiple Choice

A profit-maximizing monopolist has the cost schedule c(y) = 40y. 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 $21 for every unit that she sells. Giving her the subsidy would make her

• A) decrease her price by $49.
• B) decrease her price by $28.
• C) decrease her price by $10.50.
• D) decrease her price by $21.
• E) leave her price unchanged.

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