Consider a Single-Price Monopolist That Is in Equilibrium at Output

Multiple Choice

Consider a single-price monopolist that is in equilibrium at output level Q* and price P*.If the government imposes a new tax on the firm of $25 per unit of output,then

A) output and price will remain at Q* and P*
B) output will fall and price will rise by $25
C) output will fall and price will fall by less than $25
D) output will rise and price will fall by $25
E) output will fall and the price will rise by less than $25