If the equilibrium price of gasoline is $4.00 per gallon and the government will not allow oil companies to charge more than $3.00 per gallon of gasoline, which of the following will happen?

A. Demand must eventually decrease so that the market will come into equilibrium at a price of $3.00.
B. The market will be in equilibrium at a price of $3.00.
C. A nonprice rationing system such as ration coupons must be used to ration the available supply of gasoline.
D. Supply must eventually increase so that the market will come into equilibrium at a price of $3.00.


Answer: C

Economics

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