Review Figure 3.4 again. Suppose the price of gasoline is $1.00. Will the quantity demanded be lower or higher than at the equilibrium price of $1.40 per gallon? Will the quantity supplied be lower or higher? Is there a shortage or a surplus in the market? If so, of how much?

Figure 3.4 

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P ($ per gallon) $2.20 $1.80 $1.40 a $1.20 $1.00 $0.60 Excess supply or surplus E S An above-equilibrium price Equilibrium price A below-equilibrium price Excess demand D or shortage 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons)