Use the Figure Below to Answer the Following Question(s)

question 325

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-12

-Refer to Figure 4-12.The supply curve S and the demand curve D₁ indicate initial conditions in the market for college textbooks.A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase,shifting the demand curve from D₁ to D₂.Which of the following is true for this subsidy given the information provided in the exhibit?

• A)The original average selling price of textbooks was $100,and after the subsidy it rises to $120.
• B)$90 represents the net price a buyer must pay for a textbook after taking into account the subsidy payment.
• C)Textbook buyers will receive an actual benefit of $10 from the subsidy,while textbook sellers will receive an actual benefit of $20 from the subsidy.
• D)All of the above are true.

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Definitions:

Factor Distribution

The way in which income and wealth are shared among different factors of production, such as labor and capital.

Income

The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as a profit from financial investments.

Derived Demand

The demand for a good or service that arises from the demand for another good or service. For example, the demand for steel is derived from the demand for cars.

Factor Market

A market where factors of production (such as labor, capital, and land) are bought and sold, different from markets for goods and services.