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:

Resolutions

Formal decisions or statements adopted by an organization or legislative body through a voting process.

Cumulative Voting

A method of voting for corporate directors that allows shareholders to multiply their shares by the number of directorships being voted on and to allocate their votes among the candidates as they see fit.

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends or capital appreciation.

Directors

Individuals elected by shareholders to oversee the management and make strategic decisions for a corporation.