Refer to Figure 15-11. Suppose the local government imposes a ...

[lbcchick]

Refer to Figure 15-11. Suppose the local government imposes a 2.50 per month tax on cable companies. What happens to the price charged by the cable company following the imposition of this tax?
 
  A) The price rises from PM but it increases by an amount greater than 2.50 to reflect the monopoly's markup.
  B) The price remains at PM.
  C) The price rises from PM but it increases by an amount less than 2.50.
  D) The price rises from PM to (PM + 2.50).

Question 2

Online companies gather personal information about the customers who shop on their Web sites and some of those companies will use the data to estimate price elasticities of the customers.
 
  Doing this is a way that these companies might be able to charge a higher price for a product to those customers who have a ________ price elasticity of demand.
  A) low B) high C) negative D) unitary

[joechoochoy]

Answer to Question 1

B

Answer to Question 2

A