Question

In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. After the changes, assume that the government enacts a price ceiling of $2. What will happen in the market?

A) Quantity supplied will equal quantity demanded.
B) There will be a surplus of 1 gallon.
C) There will be a shortage of 3 gallons.
D) There will be a surplus of 2 gallons.
E) There will be a shortage of 4 gallons.

Figure 1:
Price/Gallon
The Market for Gasoline
$17
$16
$15
$14
$13
$12
$11
$10
$9
$8
$7
$6
$5
$4
$3
$2
$1
0
1
5
6
7
8
Gallons
en
O

Image Transcription

Figure 1: Price/Gallon The Market for Gasoline $17 $16 $15 $14 $13 $12 $11 $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 0 1 5 6 7 8 Gallons en O

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Supply and Demand

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