A Monopolist Faces Linear Inverse Demand P = a -

question 64

Multiple Choice

A monopolist faces linear inverse demand P = a - bQ and constant marginal cost, c. The term a increases by amount Δa. By how much does the monopolist's optimal price increase?

• A) Δa.
• B) Δa/2.
• C) Δa-c.
• D) Δa/b.

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