-Refer to the Above Figure

question 59

Multiple Choice

-Refer to the above figure. If government sets the maximum legal price of gasoline at $2 per gallon, then the $2 limit acts as

• A) a price floor.
• B) a price ceiling.
• C) an equilibrium price.
• D) a just price.

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Definitions:

Public Good

This is a good that is non-excludable and non-rivalrous in consumption, meaning it can be used by everyone and one's use does not diminish another's.

Costs

The outlay or expenditure (monetary or otherwise) incurred by a business or individual in the process of producing or offering goods and services.

Benefits

The advantages or positive outcomes that come from specific actions, policies, or investments.

Principal-Agent Problem

The conflict that arises when the goals of principals, such as shareholders, differ from those of agents who make decisions on behalf of the principals, like executives.