75125175QuantityHow many fewer units are exchanged because of the price ceiling than would beexchanged in a free market?506065100Situation 4-1During the winter of 1973-74, a general system of wageand price controls (including a price ceiling on gasoline)was in force in the United States. At the beginning of 1974,some oil-producing countries imposed an oil embargo (alegal prohibition on commerce) on the West. In the springof 1974, price controls were abolished.Because price controls were in effect at the time the embargo occurred, an economist wouldpredict thatthe number of dollars one would need to pay at the pump for a full tank ofgasoline would increase sharply.the number of dollars one would need to pay at the pump for a full tank ofgasoline would decline sharply.long waiting lines and black markets would appear.a surplus of gasoline would result.Price ceilingPrice (dollars)

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125 175 Quantity How many fewer units are exchanged because of the price ceiling than would be exchanged in a free market? 50 60 65 100 Price ceiling Price (dollars)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 32P: Imagine that to preserve the traditional way of life in small fishing villages, at government...

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Concept explainers

Price Ceilings and Price Floors

Price Ceilings and Price Floors strategy is used by the Government to control the prices of certain goods and services in the market. This method helps the Government to protect the interests of both buyers and suppliers in difficult economic times.

Question

75
125
175
Quantity
How many fewer units are exchanged because of the price ceiling than would be
exchanged in a free market?
50
60
65
100
Situation 4-1
During the winter of 1973-74, a general system of wage
and price controls (including a price ceiling on gasoline)
was in force in the United States. At the beginning of 1974,
some oil-producing countries imposed an oil embargo (a
legal prohibition on commerce) on the West. In the spring
of 1974, price controls were abolished.
Because price controls were in effect at the time the embargo occurred, an economist would
predict that
the number of dollars one would need to pay at the pump for a full tank of
gasoline would increase sharply.
the number of dollars one would need to pay at the pump for a full tank of
gasoline would decline sharply.
long waiting lines and black markets would appear.
a surplus of gasoline would result.
Price ceiling
Price (dollars)

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