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If the government imposes a per-unit tax on the output of a monopoly with a downward-sloping demand curve, the burden of the tax will be

answer choices
O Borne entirely by consumers
O Borne entirely by the monopolist
O Borne entirely by the government
O Shared by the monopolist and the government
O Shared by consumers and the monopolist

User Zawisza
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Answer: Shared by consumers and the monopolist

Step-by-step explanation:

When a per-unit tax is imposed on the output of a monopoly, the tax burden is shared by consumers and the monopolist. This is because the monopoly's demand curve is downward-sloping, meaning that the price elasticity of demand is greater than 1. Therefore, when the price of the good increases due to the tax, the demand for the good will decrease, causing the monopolist's revenue to fall. This results in the monopolist bearing part of the tax burden. At the same time, the higher price of the good will cause consumers to bear the remaining part of the tax burden. Evidence of this can be seen in the work of economists such as George Stigler, who found that the burden of a tax on a monopolist is usually split between the monopolist and the consumers.

User Jeeva J
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