If the government set a price ceiling of 50 cents for a gallon of gasoline,the most likely consequence would be

Question

Quizplus · Accepted Answer

A price ceiling is a legal maximum price, set by the government, that is lower than the equilibrium price. In this case, if the government sets a price ceiling of 50 cents for a gallon of gasoline, it is below the market equilibrium price. This means that there will be excess demand for gasoline, leading to a shortage of gasoline in the market. Gasoline stations will not be willing and able to supply enough gasoline at 50 cents a gallon, and consumers will try to buy more gasoline than is available at that price. Therefore, there will be long lines, rationing, and other inefficient means of allocating the scarce gasoline.

If the Government Set a Price Ceiling of 50 Cents