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

question 25

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) = 5y, 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 3 dollars.
• B)increase its price by 2 dollars.
• C)increase its price by 1 dollars.
• D)leave its price constant.
• E)None of the above.

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Definitions:

Unemployment Rate

The rate of joblessness among individuals in the labor force who are earnestly seeking employment.

Labor Force

The total number of people who are employed and those unemployed but seeking work in an economy.

Total Population

The complete count of all individuals within a specified area or country at a given time.

Officially Unemployed

Individuals who are jobless, actively seeking work, and available to take a job, as defined and measured by official government statistics.