E202Exam1.4 - price and equilibrium quantity How have price...

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8. (20 pts) Consider the effects of a disruption in refining following the recent hurricanes: Price of gasoline Quantity demanded of gasoline Quantity supplied of gasoline Reduced quantity supplied of gasoline 1.00 50 35 20 2.00 45 45 30 3.00 40 55 40 4.00 35 65 50 ($ per gallon) (millions of gallons per month) a. Use the above table to graph demand, supply, and a reduction in the supply of gasoline. b. What is the original equilibrium price and equilibrium quantity? What is the new equilibrium
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Unformatted text preview: price and equilibrium quantity? How have price and quantity changed? c. Suppose the federal government responds by imposing a price ceiling of $2.00 per gallon. What would be the quantity demanded of gasoline and the quantity supplied of gasoline? How large is the shortage (excess demand) of gasoline? d. What might be a consequence (downside) of the price ceiling?...
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