Refer to the Graph Shown

question 14

Multiple Choice

Refer to the graph shown. With an effective price ceiling at Pc, the effect is an implicit tax on:

• A)suppliers of area C and a subsidy to consumers of that area.
• B)suppliers of area D and a subsidy to consumers of that area.
• C)consumers of area C and a subsidy to suppliers of that area.
• D)consumers of area D and a subsidy to suppliers of that area.

---

Definitions:

Mass Production

The manufacture of large quantities of standardized products, often utilizing assembly line technology and automation.

Pure Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taking behavior.

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, leading to competition based on quality, price, and marketing.

Economic Profits

The surplus or financial gains achieved by a firm or an individual after accounting for all explicit and implicit costs.