7/30/2017 4:16 PM

-Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?
A) The equilibrium price of gasoline was probably below the price ceiling.
B) The demand curve for gasoline in the 1970s was vertical.
C) The supply curve for gasoline in the 1970s was vertical.
D) The equilibrium price of gasoline was probably above the price ceiling.

Question

7/30/2017 4:16 PM
 
-Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?
A) The equilibrium price of gasoline was probably below the price ceiling. 
B) The demand curve for gasoline in the 1970s was vertical. 
C) The supply curve for gasoline in the 1970s was vertical. 
D) The equilibrium price of gasoline was probably above the price ceiling.

Quizplus · Accepted Answer

If the equilibrium price of gasoline was already below the price ceiling, then the price ceiling would not have had any noticeable effect on the market. This suggests that the market was already operating efficiently without the need for government intervention.

7/30/2017 4:16 PM -Refer to Situation 4-1.Before the Oil Embargo,the Price Ceiling on Oil