The following graph shows the market for paint

Subject:EconomicsPrice: Bought3

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The following graph shows the market for paint.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in the grey field will change accordingly.

 

The market price of paint without government intervention is ____________ ($2, $3, $4, $5) per gallon.

Consider legislation that doesn't allow the price of paint to be below $6 per gallon and stipulates that the government buy any surplus paint produced at that price. In order to raise the price to $6 per gallon, the government would need to buy ____________ (50, 71, 0, 100) gallons of paint, which would cost the government ____________ ($300, $450, $24, $150).

Suppose there are only a few paint producers who would benefit from this legislation and millions of consumers who would suffer through higher prices. In this case, legislation imposing price supports at $6 per gallon would mean which of the following?

A. The legislation should pass because it is economically efficient, but it probably won't because consumers don't understand enough about economics.

B. The legislation will probably pass because its benefits are concentrated while its costs are widespread.

C. The legislation will be easily defeated because the increased price of paint would hurt millions of consumers, who would not reelect their representatives.

D. The legislation may or may not pass since the benefits and costs of the legislation are concentrated among similarly sized groups.