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

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. Next, assume that the government enacts a price ceiling of $2. What is the loss in consumer surplus?

A) $6
B) $2
C) $12
D) There is no consumer welfare loss because prices are lower.
E) There is not enough information to calculate.

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
Transcribed Image Text: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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