Consider the following statements. 1. One way the government can induce a monopolist to expand his output is by imposing a price ceiling that make the monopolist lower his price. 2. MC = MR = AC = AR shows the equilibrium position of the competitive firm. 3. One way the government can induce a monopolist to expand his output by imposing a price floor that makes the monopolist raise his price. 4. One way the government can induce a monopolist to expand his output by imposing a specific tax on the monopolist output. Which of the statement(s) given above is/are correct?

The correct answer is: Only 2.

A price ceiling is a legal maximum on the price that can be charged for a good or service. A price floor is a legal minimum on the price that can be charged for a good or service. A specific tax is a tax that is levied on a per-unit basis, regardless of the value of the good or service being taxed.

A monopolist is a firm that is the only seller of a good or service in a market. A competitive firm is a firm that is one of many sellers of a good or service in a market.

In a competitive market, the equilibrium price is determined by the intersection of the demand curve and the supply curve. The equilibrium price is equal to the marginal cost of production. The equilibrium quantity is equal to the quantity demanded at the equilibrium price.

In a monopoly market, the monopolist sets the price and quantity that maximizes its profits. The monopolist’s profit-maximizing price is higher than the competitive price, and the monopolist’s profit-maximizing quantity is lower than the competitive quantity.

A price ceiling can be used to induce a monopolist to expand its output. A price ceiling is a legal maximum on the price that can be charged for a good or service. If the price ceiling is set below the monopolist’s profit-maximizing price, the monopolist will be forced to lower its price and expand its output.

A price floor cannot be used to induce a monopolist to expand its output. A price floor is a legal minimum on the price that can be charged for a good or service. If the price floor is set above the monopolist’s profit-maximizing price, the monopolist will be able to charge the price floor price and still earn a profit. However, the monopolist will not expand its output, because it will not be able to increase its profits by doing so.

A specific tax cannot be used to induce a monopolist to expand its output. A specific tax is a tax that is levied on a per-unit basis, regardless of the value of the good or service being taxed. If a specific tax is imposed on a monopolist, the monopolist will pass the tax on to consumers in the form of a higher price. The monopolist will not expand its output, because the tax does not affect its marginal cost of production.

Therefore, the only statement that is correct is statement 2.