Question: Help with these two MACRO questions please Capping Gasoline Prices As gasoline prices rise, many people are calling for price caps, but price caps generate
Help with these two MACRO questions please


Capping Gasoline Prices As gasoline prices rise, many people are calling for price caps, but price caps generate a distorted reflection of reality, which leads buyers and suppliers to act in ways inconsistent with the price cap. By masking reality, price caps only make matters worse. Source: Pittsburg Tribune-Review, September 12, 2005 Suppose a price ceiling is set below the equilibrium price in the market for gasoline. How does the price cap influence the quantity of gasoline supplied and the quantity demanded? If initially the market is in equilibrium, then the price ceiling the quantity of gasoline supplied and the quantity of gasoline demanded. A. decreases; decreases O B. decreases; increases O C. increases; decreases D. increases; increasesThe figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon Price (dollars per gallon of ice cream) on suppliers in this market, shifting the supply curve from S to S,. The total tax revenue is equal to 20 O A. $800,000. 18 O B. $200,000. 16 O C. $400,000. So 14 O D. $500,000. 12 O E. More information is needed to determine the total tax revenue. 10 CO 50 100 150 200 250 300 350 Quantity (thousands of gallons of ice cream)
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