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March 25, 2017

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Q1) whether the following statement is true or not? some reasons plz~!

"a monopolist produced 1 million units last year. If a $10 per unit tax is imposed, the profits of the monopolist will decrease by $10 million"

  • Economics - ,

    Chances are the monopolist would raise the price of the product by $10 a unit and the profits would remain the same.

  • Economics - ,

    False: profits will decrease, but by an amount less than $10M. The monopolist will cut back on production; it will produce something less than 1 million units.

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