Gasoline market is in equilibrium at a monetary value of $ 3 per gallon and a measure of 45 million gallon per month in the United States. Then a war in the Middle East disrupts imports of oil into the United States. switching the supply curve for gasolene from S1 to S2. The monetary value of gasolene begins to lift and consumer protest. The federal authorities responds by puting a monetary value ceiling of $ 3 per gallon.
A ) The consequence of enforcing monetary value ceiling in equilibrium monetary value and the measure demanded is studied. B ) The equilibrium monetary value and the equilibrium measure presuming there is no monetary value ceiling is determined. C ) The graph that shows consumer excess. manufacturer excess and dead weight loss is illustrated D ) The consequence of black market in consumer excess. manufacturer excess and dead weight loss is analyzed. Tocopherol ) The consequence of monetary value ceiling in consumers satisfaction is studied. .
Assuming that there is no monetary value ceiling. the equilibrium monetary value is $ 4. 00 and the equilibrium measure is 40 million gallons. When the monetary value ceiling is puting at $ 3. the equilibrium monetary value will be dropped to $ 3 and the measure demanded will be 45 million gallons if no black market is assumed. The measure supplied will be 30 million gallons which means that there is deficit of 15 million gallons.
As shown in the below Figure ( ) . A+B+C is stand foring the Consumer excess. D represent the manufacturer excess and E+F represent deadweight loss.
In instance of there is a black market. consumers are willing to pay $ 6. 00 per gallon for the sum supplied by manufacturer of gasolene at a monetary value ceiling of $ 3. 00. A represents consumer excess. B+C+D represents manufacturer excess and E+F represents deadweight loss.
Some consumers are made better off by the monetary value ceiling because they can buy gasolene at a lower monetary value than they could. However. some consumers will non be able to happen gasolene at a monetary value of $ 3. 00 and will be worse off. Consumer excess without the monetary value ceiling is A+B+E. but with the monetary value ceiling it could be A + B + C and as it is noticed C is larger than E. The country of E is 1/2 ? 10. 000. 000 ? $ 2. 00 = $ 10. 000. 000. while the country of C is $ 1. 00 ?x 30. 000. 000 = $ 30. 000. 000. )