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What Effect Does a Lump-Sum Profit Tax Have on a Monopolist

Question 111

Multiple Choice

What effect does a lump-sum profit tax have on a monopolist?


A) It causes the price to increase but has no effect on the output.
B) It causes the output to decrease but has no effect on the price.
C) It causes the price to increase and the output to decrease.
D) It causes the output to increase but has no effect on the price.
E) It has no effect on either the price or the output.

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