Figure 6-12

-Refer to Figure 6-12.When the price ceiling applies in this market,and the supply curve for gasoline shifts from S₁ to S₂,the resulting quantity of gasoline that is bought and sold is

Question

Figure 6-12
 
-Refer to Figure 6-12.When the price ceiling applies in this market,and the supply curve for gasoline shifts from S₁ to S₂,the resulting quantity of gasoline that is bought and sold is

Quizplus · Accepted Answer

When the price ceiling applies, the maximum price that can be charged is P1, which is lower than the equilibrium price of P3. As a result, the quantity demanded exceeds the quantity supplied, leading to a shortage of Q3-Q1. When the supply curve shifts to S2 due to some event such as higher costs, the quantity supplied reduces from Q3 to Q2, exacerbating the shortage. Therefore, the resulting quantity of gasoline that is bought and sold is less than Q3.

Figure 6-12 -Refer to Figure 6-12.When the Price Ceiling Applies in This