7/30/2017 4:16 PM

-Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been
A) an increase in both price and quantity.
B) an increase in price and a decrease in quantity.
C) a decrease in price and an increase in quantity.
D) a decrease in both price and quantity.

Question

7/30/2017 4:16 PM
 
-Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been
A) an increase in both price and quantity. 
B) an increase in price and a decrease in quantity. 
C) a decrease in price and an increase in quantity. 
D) a decrease in both price and quantity.

Quizplus · Accepted Answer

The oil embargo would have caused a decrease in the supply of gasoline, which would shift the supply curve to the left. This would result in an increase in the equilibrium price and a decrease in the equilibrium quantity. Therefore, without price controls, the effect would have been an increase in price and a decrease in quantity.

7/30/2017 4:16 PM -Refer to Situation 4-1.If No Price Controls Had Been in Price