Demand, Supply, and Equilibrium in Markets for Goods and Services

Critical Thinking Questions

Review Figure. Suppose the government decided that, since gasoline is a necessity, its price should be legally capped at $1.30 per gallon. What do you anticipate would be the outcome in the gasoline market?

Explain why the following statement is false: “In the goods market, no buyer would be willing to pay more than the equilibrium price.”

Explain why the following statement is false: “In the goods market, no seller would be willing to sell for less than the equilibrium price.”