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Shortage or surplus of gasoline

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Reference no: EM13846667

Problem: Suppose the U.S. government places a price ceiling on the sale of gasoline at $3 per gallon in the figure below,

1325_price ceiling on the sale of gasoline.jpg

a. How much of a shortage or surplus of gasoline would result?

b. Calculate the effects of this policy in terms of the changes in consumer surplus and producer surplus.

c. How much deadweight loss is created?

d. What would happen if the price ceiling is raised to $6 per gallon?

Reference no: EM13846667

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