If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax.

Name: If a per-unit tax on output sold is imposed on a monopoly's product, the monopolist will increase its market price by the full amount of the tax.
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Question

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A monopolist will not necessarily increase the market price by the full amount of the tax because it will consider the elasticity of demand and may absorb part of the tax to maximize profits.

If a Per-Unit Tax on Output Sold Is Imposed on a Monopoly's