An effective price ceiling on gasoline means that

Question

Quizplus · Accepted Answer

An effective price ceiling on gasoline would mean that the price of gasoline is set lower than the market equilibrium price. This would lead to a situation where the quantity demanded exceeds the quantity supplied, causing shortages and long lines at gas stations. Thus, option A is the correct choice. Option B is incorrect because an effective price ceiling does not eliminate excess demand. Option C is incorrect because it is not realistic to expect people to quit driving altogether. Option D is incorrect because an effective price ceiling on gasoline would likely lead to a decrease in the amount of gasoline people can consume, not an increase. Option E is incorrect because there is no reason to believe that a shortage of cars would result from an effective price ceiling.

An Effective Price Ceiling on Gasoline Means That