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

question 21

Multiple Choice

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 60 - y and its total costs are c(y) = 10y, where prices and costs are measured in dollars.In the past it was not taxed, but now it must pay a tax of 4 dollars per unit of output.After the tax, the monopoly will

• A)increase its price by 4 dollars.
• B)leave its price constant.
• C)increase its price by 2 dollars.
• D)increase its price by 6 dollars.
• E)None of the above.

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Definitions:

Larger Universities

Educational institutions with a significant student population, offering a wide variety of programs and resources.

Explanatory Variable

A type of variable in statistical modeling that is used to explain variations in the dependent variable; it is also known as an independent variable.

Quantitative Variables

Variables that represent numerical amounts or quantities, which can be measured and expressed numerically.

Associated

Pertains to the connection or relationship between two or more variables or factors.