Figure 6-12 -Refer to Figure 6-12.When the Price Ceiling Applies in This

question 125

Multiple Choice

Figure 6-12
-Refer to Figure 6-12.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,

• A)the market price will increase to P₃.
• B)a surplus will occur at the new market price of P₂.
• C)the market price will stay at P₁.
• D)a shortage will occur at the new market price of P₂.

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Definitions:

Price

The fiscal amount deemed necessary, expected, or expended in purchasing something.

Rationing Device

A method or system used to allocate scarce goods, services, or resources among competing demands.

Equilibrium

A state in a market where supply equals demand, and there is no tendency for change in the price or quantity.

Price Floor

A government or regulatory-imposed price control that sets the minimum allowable price to be charged for a particular good or service. It is aimed at protecting producers by ensuring prices do not fall below a certain level.