Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline)was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce)on the West. In the spring of 1974, price controls were abolished.
Refer to Situation 4-1. An economist would have most likely predicted that the oil embargo imposed in 1974 would result in a
A)leftward shift in the supply (curve)of gasoline.
B)rightward shift in the supply (curve)of gasoline.
C)leftward shift in the demand (curve)for gasoline.
D)rightward shift in the demand (curve)for gasoline.

Question

Quizplus · Accepted Answer

The oil embargo imposed in 1974 would have reduced the supply of oil in the United States. As a result, the supply of gasoline would also have been reduced, causing a leftward shift in the supply curve. This would have led to higher gasoline prices, which were further exacerbated by the price controls being abolished in the spring of 1974.

Situation 4-1 During the Winter of 1973-74, a General System