Scenario: Suppose that the government imposes a price control on gasoline where the legal price is set at $1.50 per gallon while the equilibrium price would be $2.25. A shortage ensues. Worried that you may not have enough gas to commute to school and do errands, you get up before dawn to go to a gas station to fill up the tank. But you find yourself waiting in a long line. Fortunately, the station did not run out of gas before your turn came up, and you were happy to drive away with a full tank.
-Refer to the scenario above.The shortage results because ________.

Question

Quizplus · Accepted Answer

A shortage occurs when the quantity demanded of a good exceeds the quantity supplied at the set price. In this case, the legal price of $1.50 is below the equilibrium price of $2.25, which means that the quantity demanded by consumers will be higher than the quantity supplied by sellers. As a result, a shortage occurs, and consumers have to wait in long lines to obtain the limited gasoline available. Thus, choice B is the best answer.

Scenario: Suppose That the Government Imposes a Price Control on Gasoline