Price ceilings on gasoline, such as those imposed in the 1970s in the U.S., will
A) generate surpluses of gasoline
B) cause gas stations to offer more free services
C) create a new favorable equilibrium price of gasoline
D) cause shortages of gasoline

Question

Quizplus · Accepted Answer

Price ceilings set below the equilibrium price result in shortages because the quantity demanded exceeds the quantity supplied at the artificially low price. This was observed during the 1970s in the U.S. when price ceilings on gasoline led to long lines and shortages at gas stations.

Price Ceilings on Gasoline, Such as Those Imposed in the 1970s