Eliminate the monopoly''s economic profit

Reference no: EM13200729

A monopolist is in long-run equilibrium and earning economic profits equal $100 million. The government imposes a lump sum tax of $100 million on the monopolist. (A limp sum tax is a tax the monopolist must pay regardless of its level of output) Will this tax:

a) cause the monopoly to produce a different level of out put?

b) eliminate the monopoly's economic profit?

Reference no: EM13200729

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