The Below Figure Shows the Demand and Supply Curves in the Market

question 2

Multiple Choice

The below figure shows the demand and supply curves in the market for gasoline.The price and quantity at the point of intersection of the demand and supply curves is $30 and 300 gallons respectively. Figure 3.6 Assume that the market for gasoline in Figure 3.6 is in equilibrium.What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

• A)The profit made by gasoline producers will increase.
• B)The demand for gasoline will decrease.
• C)The quantity of gasoline supplied to the market will decrease.
• D)There will be a surplus of gasoline in the market.
• E)The demand curve for gasoline will shift to the right.

---

Definitions:

Central Planning

An economic system where all major production, investment, and distribution decisions are made by a central authority, typically the government.

Free Enterprise

An economic system in which private businesses operate in competition and largely free of state control, with minimal government intervention.

Price Mechanism

The method through which changes in supply and demand cause prices to increase or decrease, directing how resources are distributed in a market-based economy.

Market Failure

An instance where goods and services are distributed by an unregulated market in a manner that is not optimum, frequently causing a reduction in the total wellbeing of society.