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. Supply must eventually increase 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. Demand must eventually decrease so that the market will come into equilibrium at a price of $3.00.


Answer: C

Economics

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A) Any increase in the scale of operation will encounter either constant returns to scale or diseconomies of scale. B) All possible economies of scale have been exhausted. C) The short-run average total cost curve's minimum point is equal to the long-run average cost curve's minimum point. D) An increase in the output level will increase profit.

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Economics

In reality, according to the model developed in Section 15.5 of the textbook, prices of non-renewable resources have not increased continually because of

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Economics