Consider a monopolist that is earning profits in the long run.If the government imposes a lump-sum tax on this monopolist (that is less than its profits),then
A)output would decrease and price to consumers would increase.
B)neither output nor price would change.
C)the output would remain the same while price increased.
D)the monopolist would cease production.
E)new firms would enter the industry.

Question

Quizplus · Accepted Answer

A lump-sum tax does not affect the marginal cost or marginal revenue, so the monopolist's output and price remain unchanged.

Consider a Monopolist That Is Earning Profits in the Long