S. Klepper, Economics 73-100, Fall 2011

 

Mini-test 7

 

Consider a monopolist that maximizes its sales rather than its profits. Suppose that a tax of $5 per unit is imposed on the monopolist.

 

Which of the following statements concerning this situation are correct?Mark true for a correct answer and false for an incorrect one and provide explanations for each of your answers.

 

_____1. The demand curve of the monopolistís product would shift to the left.

 

_____2. The marginal revenue curve of the monopolist would shift to the left.

 

_____3. The output supplied by the monopolist would not change.

 

_____4. The price charged by the monopolist would not change.

 

_____5. The profit earned by the monopolist would decline.