Figure 6-8 -Refer to Figure 6-8. When a Certain Price Control Is

question 110

Multiple Choice

Figure 6-8
-Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

• A) a price ceiling of $2.00.
• B) a price ceiling of $5.00.
• C) a price floor of $5.00.
• D) either a price ceiling of $2.00 or a price floor of $5.00.

---

Definitions:

Distorting Taxes

Taxes that alter the allocation of resources and change consumer or producer behavior, leading away from an efficient market outcome.

Excess Burdens

Refers to the additional costs or losses to society beyond the direct financial effects, caused by inefficiencies or distortions in market transactions.

Benefits-Received Principle

A theory of taxation wherein individuals pay taxes in proportion to the benefits they receive from government services.

Camping Fee

A charge for the privilege of accessing and using facilities or spaces designated for camping.