Exhibit -Refer to Exhibit

Exhibit
$\begin{array}{ccc} \text{Price per gallon} & \begin{array}{c} \text{Quantity Demanded }\\\text{(thousands of gallons) }\end{array} & \begin{array}{c} \text{Quantity Supplied} \\\text{of ga soline }\\\text{(thousands of gallons) }\end{array} \\\hline\$ 4.50 & 600 & 2,000 \\\$ 4.25 & 700 & 1,900 \\\$ 4.00 & 800 & 1,800 \\\$ 3.75 & 950 & 1,700 \\\$ 3.50 & 1,200 & 1,600 \\\$ 3.25 & 1,500 & 1,500 \\ \$ 3.00 & 1,800 & 1,400 \\\$ 2.75 & 2,100 & 1,300 \\\$ 2.50& 2,400 & 1,200\end{array}$
-Refer to Exhibit. The government imposes a $3.25 price ceiling at the same time there is a substantial decrease in the price of sport utility vehicles. (Assume that sport utility vehicles get very low mileage per gallon.) As a result, the:

A) price of gasoline equals $3.25 per gallon and the quantity demanded equals the quantity supplied
B) price of gasoline rises above $3.25 per gallon and a surplus of gasoline is created
C) price of gasoline will fall below $3.25 per gallon and a shortage of gasoline is created.
D) legal price of gasoline will equal $3.25 per gallon and a shortage of gasoline is created.

Correct Answer:

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