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:

FACES Pain Rating

A visual scale for assessing pain intensity, often using faces ranging from smiling (no pain) to crying (worst pain).

Numeric Scale

A sequence of numbers used to measure or rate the level of something, such as pain.

Oucher Scale

A pain rating scale designed for children, using photographs and numerical scales to quantify pain intensity.

Patient-Controlled Analgesia (PCA)

A method of pain management that allows patients to self-administer prescribed doses of pain medication through a device.