Analyze monopoly after the tax

Reference no: EM13174409

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y) = 50 - 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 2 dollars per unit of output. After the tax, the monopoly will...

a) leave its price constant.

b) increase its price by 2 dollars.

c) increase its price by 3 dollars.

d) increase its price by 1 dollar.

e) none of the above.

Reference no: EM13174409

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