Figure 6-32 -Refer to Figure 6-32.If the Government Set a Price Ceiling

question 9

Short Answer

Figure 6-32
-Refer to Figure 6-32.If the government set a price ceiling at $40,would there be a shortage or surplus,and how large would be the shortage/surplus?

---

Definitions:

Marginal Tax Rate

The rate of tax applied to the last dollar of income, indicating how much of any additional income will be taken as tax.

Lump-Sum Tax

A tax that is a set amount, no matter the taxpayer's income level or economic activity.

Proportional Tax

A taxation framework where the same rate is consistently applied to everyone, with no variation based on the amount of income.

Marginal Tax Rate

The rate at which tax is charged on an additional dollar of income.