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

question 3

Multiple Choice

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 30 - y and its total costs are c(y) = 6y, where prices and costs are measured in dollars.In the past it was not taxed, but now it must pay a tax of 2 dollars per unit of output.After the tax, the monopoly will

• A)increase its price by 2 dollars.
• B)increase its price by 3 dollars.
• C)increase its price by 1 dollar.
• D)leave its price constant.
• E)None of the above.

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Definitions:

Continental Crust

The thick part of the Earth's crust that forms the continents, characterized by its buoyancy and primarily granitic composition.

Passive Margin

A type of continental margin that is not an active plate boundary, characterized by little volcanic and earthquake activity.

Indonesian Earthquake

A seismic event occurring in Indonesia, a country prone to earthquakes due to its location on the Pacific "Ring of Fire."

Tsunami

A large sea wave produced by uplift, subsidence, or some other disturbance of the seafloor, especially by a shallow submarine earthquake.