If a $10 per unit tax is levied on the output of a monopolist, more of that tax will be shifted to con?sumers than would be the case if the same good were produced by a competitive industry.

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Quizplus · Accepted Answer

In a competitive market, firms have less power to pass tax increases onto consumers because consumers can easily switch to substitutes if the price rises too much. In contrast, a monopolist, facing less competition, can more easily shift a larger portion of the tax to consumers through higher prices.

If a $10 Per Unit Tax Is Levied on the Output