Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

What conclusion can be drawn from the diagram regarding the effects of taxes and benefits?

  • AAll income groups are better off except those originally earning more than $40 000 per year.
  • BBenefits paid to the lower income groups are not a burden because they are not paid out of tax revenues.
  • CThe average final income of the top 20% exceeds the combined final incomes of the other groups.
  • DThe progressive taxation system still favours the top 20% over the bottom 20% of households.

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