Scenario 10.3: The Demand Curve and Marginal Revenue Curve for Red Herrings

Multiple Choice

Scenario 10.3:
The demand curve and marginal revenue curve for red herrings are given as follows:
Q = 250 - 5P
MR = 50 - 0.4Q
-Refer to Scenario 10.3. Suppose that a tax of $5 per unit of output is imposed on red herring producers. The price of red herring will:

A) not change.
B) increase by less than $5.
C) increase by $5.
D) increase by more than $5.
E) decrease.