Suppose the government decided that, since gasoline is a necessity, its price should be legally capped at $1.30 per gallon. What do you anticipate would be the outcome in the gasoline market? Excess supplyor surplus$2.20$1.80An above-equilibrium priceE,Equilibrium priceA below-equilibrium price$1.40$1.20$1.00Excess demandor shortage$0.60300 400500600700800900Quantity of Gasoline (millions of gallons)P ($ per gallon)

Given, Price capped at $1.30 per gallon

Excess supply or surplus $2.20 $1.80 An above-equilibrium price E, Equilibrium price A below-equilibrium price $1.40 $1.20 $1.00 Excess demand or shortage $0.60 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) P ($ per gallon)

Excess supply or surplus $2.20 $1.80 An above-equilibrium price E, Equilibrium price A below-equilibrium price $1.40 $1.20 $1.00 Excess demand or shortage $0.60 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) P ($ per gallon)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Cities have experienced a decline in garbage collection. Municipalities changed from a flat fee to a price per bag fee. Would you recommend a flat fee or price per bag if the change in quantity demanded was affected?
The Organization for the Promotion of Brussels Sprouts has convinced the government of Ironia to institute a price floor on the sale of Brussels sprouts at $8 per bushel. Demand is given by:P = 9 – Qand supply by:P = 2Q,where Q is measured in thousands of bushels.Instructions: Round your answers to the nearest whole number.a. At market equilibrium, the price is $ per bushel and the equilibrium quantity is thousand bushels.b. With the price floor, the price is $ per bushel and the quantity sold is thousand bushels.c. The excess quantity supplied of Brussels sprouts produced with the price floor is thousand bushels.
Consider two types of cars: 1) Performance cars, which emphasize good performance (good mileage, towing capacity, horsepower, etc). 2) Luxury cars, which emphasize good looks Let's say that with the higher gas prices Americans care less about how their cars look and more about how they perform. We'd therefore expect to see in the market for performance cars and in the market for luxury cars. demand fall; demand rise demand rise; quantity demanded fall demand rise; demand fall O demand fall; quantity demanded rise
a) In the market for sugary drinks, the current equilibrium price is $10 and the equilibrium quantity is 30. The demand choke price is $50 and the supply choke price is $5 (a) Draw a demand and supply diagram, and shade the regions that represent consumer and producer welfare. Calculate the Total welfare in this market b) In this market, you now know that E D = −0.4 and E S = 1.2. Redraw your diagram in part (a) with the correct sloping curves. In this part you do not have to shade the welfare regions. All you need to do is redraw the diagram with the same equilibrium price and quantity, and choke prices but adjust the slope of each curve to reflect their respective elasticity c) If a tax was to be implemented in this market, what percentage of the burden is borne by the buyer? d) The government plans to discourage the consumption of sugary drinks and as such, they implemented a $1 tax on every bottle produced. In this situation, the suppliers are taxed directly but they hope to pass…
If everyone thinks that the price of gas will go up next week, what is likely to happen to the demand for gasoline today?
What is the equilibrium price? What is the equilibrium quantity? Quantity Demanded 5 6 7 8 9 10 11 Price $7 6 5 4 3 2 1 Quantity Supplied 9 8 7 6 5 4 3
Given the chart below, what is the equilibrium price and quantity? Market for Bottled Water $4 $2 30 60 90 120 Quantity (In Thousands) Provide your answer below: a = thousand, p = $ per gallon Price per Gallon
The market demand for milk in country x is 18 billion gallons per month,but the supply is 10 billion gallons per month. What must happen in order to achieve market equilibrium
If you catch one hundred cocaine shipments, and the street price does not increase, then have you made any real impact on the supply of product to the consumer?
After Hurricane Katrina damaged many U.S. gasoline refineries in 2005, the price of gasoline shot up around the country. The Federal Trade Commission announced that it would investigate price gouging-charging "too much"-and several members of Congress called for price controls on gasoline. What would have been the likely effect of such a law had it been passed? Price controls on gasoline would have OA. benefited all consumers because gas prices would have been lower. OB. benefited all producers because there would have been no shortages. OC. resulted in a shortage because demand would have exceeded supply. OD. resulted in a shortage because refiners would have shut down their plants in protest. OE. resulted in a market equilibrium because gas would have been affordable
More than 20 states have laws outlawing price gouging during a state of emergency, which might be declared after a hurricane or an earthquake. These laws prohibit price increases on basic necessities, such as gasoline. Which of the arguments against price ceilings might not be significant during a state of emergency? It might be the case that during an emergency, consumers have little concern over the quality of a good that is available. It might be the case that during an emergency, consumers have little concern over the quantity of a good that is available. It might be the case that during an emergency, consumers have lttle concern over the price of a good that is available It might be the case that during an emergency, consumers have little concern over the location of a good that is available.
The figure below represents the market for Gasoline, where initially the equilibrium price was $5.60. The picture shows the effect of a $1.50 tax on gasoline. Using the information from the figure, what is the price elasticity of supply(Using the Midpoint method) when moving from equilibrium to the new supply after the tax?(round your answer to 2 decimal places)