A Monopolist Receives a Subsidy from the Government for Every

A monopolist receives a subsidy from the government for every unit of output that is consumed.He has constant marginal costs and the subsidy that he gets per unit of output is greater than his marginal cost of production.But to get the subsidy on a unit of output, somebody has to consume it.

A) He will pay consumers to consume his product.
B) If he sells at a positive price, demand must be inelastic at that price.
C) He will sell at a price where demand is elastic.
D) He will give the good away.
E) None of the above.

Correct Answer:

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