Suppose that the equilibrium price of a gallon of gas is $1.20 per gallon.The government decides to place a maximum price on gasoline and will not allow sellers to charge more than $1.40 per gallon.Illustrate this situation using a graph.Make sure that you show the original equilibrium and the effect of the maximum price on the market.What will happen in this market? What will happen to total surplus?

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The Answer of Suppose that the equilibrium price of a gallon of gas is $1.20 per gallon.The government decides to place a maximum price on gasoline and will not allow sellers to charge more than $1.40 per gallon.Illustrate this situation using a graph.Make sure that you show the original equilibrium and the effect of the maximum price on the market.What will happen in this market? What will happen to total surplus?

Suppose That the Equilibrium Price of a Gallon of Gas