FIGURE 12- 3

FIGURE 12- 3
-Suppose a cell- phone service provider has monopoly rights for a geographical region and is earning monopoly profits.If the government then imposes a lump- sum tax of $X on this firm,the effect is

A) a reduction in output and an increase in price.
B) to increase the firm's marginal costs and reduce its profit by $X.
C) an increase in consumer surplus due to the tax revenue.
D) an increase in output and a decrease in price.
E) to increase the firm's average costs and reduce its profit by $X.