A Monopolist Has the Total Cost Function C(q)= 800 +8q

question 18

Multiple Choice

A monopolist has the total cost function c(q) = 800 +8q.The inverse demand function is 80 - 6q, where prices and costs are measured in dollars.If the firm is required by law to meet demand at a price equal to its marginal costs,

• A)the firm's profits will be zero.
• B)the firm will lose $400.
• C)the firm will make positive profit but not as much profit as it would make if it were allowed to choose its own price.
• D)the firm will lose $800.
• E)the firm will lose $480.

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Definitions:

Tax Burden

The total amount of tax levied on an individual or entity, indicating the actual economic impact of taxation on wealth.

Tax Imposed

A financial charge or levy placed by a government on an individual or an entity to fund public expenditures.

Buyer Pays

A pricing term indicating that the purchaser is responsible for the cost of goods, shipping, and any additional expenses associated with the purchase.

Tax Incidence

Describes how the burden of a tax is distributed between buyers and sellers, depending on the relative elasticities of supply and demand.