A monopoly has the demand curve q = 10,000 - 100p. Its total cost function is c(q) = 1,000 + 10q. The government plans to tax the monopoly's profits at a rate of 50%. If it does so, the monopoly will
A) increase its price by 50%.
B) increase its price by more than 50%.
C) recover some but not all of the tax it pays by increasing its price.
D) not change its price or the quantity it sells.
E) None of the above.
Correct Answer:
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