ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Situation 4-1
During the winter of 1973-74, a general system of wage
and price controls (including a price ceiling on gasoline)
was in force in the United States. At the beginning of 1974,
some oil-producing countries imposed an oil embargo (a
legal prohibition on commerce) on the West. In the spring
of 1974, price controls were abolished.
Because price controls were in effect at the time the embargo occurred, an economist would
predict that
the number of dollars one would need to pay at the pump for a full tank of
gasoline would increase sharply.
the number of dollars one would need to pay at the pump for a full tank of
gasoline would decline sharply.
O long waiting lines and black markets would appear.
a surplus of gasoline would result.
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Transcribed Image Text:Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Because price controls were in effect at the time the embargo occurred, an economist would predict that the number of dollars one would need to pay at the pump for a full tank of gasoline would increase sharply. the number of dollars one would need to pay at the pump for a full tank of gasoline would decline sharply. O long waiting lines and black markets would appear. a surplus of gasoline would result.
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