Answer to Question #210915 in Microeconomics for ques

Question

The incidence of which of the following will entirely be on the monopolist?

A Specific tax

B Regulated monopoly pricing

C Lump-sum tax

D None of the above

Answer 1

The monopoly is a market structure which is characterized by the presence of a single seller selling the product and there will be no close substitutes available for the product in the market. There will be very strong barriers to entry into the market which means that no new firm can enter into the market when there is presence of economic profit in the monopoly market.

Lump sum tax is levied on the fixed amount. In simple words, it is kept same for all. Since, it is kept same then its burden is entirely borne by the monopolist.

The correct option is C.