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:
The Market for Gasoline

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

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in

Supply and Demand

Related Economics Q&A

Find answers to questions asked by student like you

Q: A) What will be the new level of consumption at the $ 340 billion level of disposable income?  B) Wh...

A: A.The change in the wealth by $10 would result in the reduction in consumption by $1. It is said tha...

Q: Question 3 D-G I don’t see how this relatedness to previous questions. How does Thisbe relate and ho...

A: d.The temporary worker program proposed by the US government leads to the increased supply of tempor...

Q: List at least 3 factors that have accounted for the rapid growth of world trade over the past 50 yea...

A: Answer - There are many factors that have accounted for the rapid growth of world trade over the pas...

Q: The following diagram shows supply and demand in the market for tablets. Use the black point (plu...

A: Consumer Surplus: It refers to the difference between the maximum price the buyer is willing to pay ...

Q: ADVANCED ANALYSIS Currently, at a price of $1 each, 100 popsicles are sold per day in the perpetuall...

A: Hey, since there are multiple questions posted, we will answer first question. If you want any speci...

Q: Suppose there is an upward surge in consumer confidence. a) If the output gap is large and positive,...

A: Answer -Part (a) -Answer - I f there is upward surge in confidence , means consumer is confident abo...

Q: A firm has fixed costs of $60 and varlable costs as Indicated in the table below. Complete the table...

A: Total cost:Total cost for quantity 0 can be calculated as follows:

Q: Identify two groups that benefit from deflation and two that lose.

A: Deflation is a situation in which the general price level tends to fall as compared to the past year...

Q: The New York Times reports that Wal-Mart has decided to challenge Netflix and enter the online DVD-b...

A: In game theory, Backward induction is an iterative process. It is a theory that reasons backward in ...