-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by
A) $100.
B) $50.
C) $25.
D) $0.

Question

-The above figure shows the demand and cost curves facing a monopoly.A $100 per unit tax would raise price by
A) $100. 
B) $50. 
C) $25. 
D) $0.

Quizplus · Accepted Answer

A monopoly has market power, allowing it to pass only a portion of the tax onto consumers in the form of higher prices. The exact amount depends on the elasticity of demand. Since monopolies do not operate in perfectly competitive markets, they will absorb part of the tax themselves and pass the remainder onto consumers, which is often less than the full amount of the tax.

-The Above Figure Shows the Demand and Cost Curves Facing