-Refer to the Above Figure

question 278

Multiple Choice

-Refer to the above figure. If the government set a price floor of $3.50 per gallon, there would be

• A) an excess quantity demanded equal to 100,000 gallons.
• B) an excess quantity supplied equal to the distance BD.
• C) an excess quantity supplied equal to the distance BF.
• D) an excess quantity supplied equal to 100,000 gallons.

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Definitions:

Common Resource

A type of good that provides users with tangible benefits, but which is available to everyone, such as air, water, and fish in the open sea, leading to potential overuse problems.

Common Resource

A natural or man-made resource where one person’s use diminishes other people’s access or enjoyment, but it is difficult to exclude anyone from using it.

Pollution Market Failure

Pollution market failure occurs when the environmental costs of pollution are not reflected in the market prices of goods or services, leading to overconsumption and excessive pollution.

Free Rider Problem

The issue arising when individuals benefit from resources, goods, or services without paying for them, which can lead to under-provision of those goods or services.