Question One: Supply and Dema

timer Asked: Dec 16th, 2015

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Question One: Supply and Demand a)  The above graph shows the supply and demand for gasoline in a particular country. As you can tell by the graph, the current price of gasoline in this country is $3.50 per gallon. The Congress in this country is concerned because they believe a lower price of $3.25 per gallon would allow consumers to spend less on gasoline and more on other goods and services thereby increasing employment and GDP. They know putting a price ceiling on gasoline would only create a shortage and they also know that the nation does not have the refining capacity to increase production beyond 2 billion gallons. Recommend a policy for the country that would get the equilibrium price to $3.25 per gallon so there would be lower prices with no surpluses nor any shortages. EXPLAIN IN DETAIL.

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