Review Figure 3.4. 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?

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)