The Demand for a Monopolist's Output Is 10,000 Divided by the Square

question 24

Multiple Choice

The demand for a monopolist's output is 10,000 divided by the square of the price it charges.The monopolist produces at a constant marginal cost of $5.If the government imposes a sales tax of $10 per unit on the monopolist's output, the monopolist price will rise by

• A)$5.
• B)$10.
• C)$20.
• D)$12.
• E)None of the above.

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Definitions:

Price Supports

Government interventions to maintain the market price of a commodity or product above its competitive equilibrium level by buying up surplus supply or subsidizing the production costs.

Agriculture

Agriculture pertains to the science, art, and practice of cultivating plants and livestock, providing the basis for food production and raw materials for various industries.

Agricultural Act of 2018

Also known as the 2018 Farm Bill, it is federal legislation that funds and governs various agricultural and food programs, including crop insurance, nutrition assistance, and rural development.

Crop Insurance

A policy that protects agricultural producers against crop loss or damage caused by weather, pests, or disease.