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. long waiting lines and black markets would appear.

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. long waiting lines and black markets would appear.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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