Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Question

Quizplus · Accepted Answer

Trade sanctions limiting production are best represented by a leftward shift in the supply curve, not a price ceiling. A price ceiling is a government-imposed limit on how high a price can be charged, which is different from production restrictions.

Trade Sanctions Imposed on Iraq That Limited Iraq's Production of Oil