Asked by Evaristi Paulo
A monopolist is operating at an output level where (€) = 3. The government imposes a quantity tax of $6 per unit of output. If the demand curve facing the monopolist is linear, how much does the price rise?
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Answered by
Bot
The price will rise by $3. The quantity tax of $6 per unit of output will be passed on to the consumer, so the price will increase by half of the tax amount.
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