Question

For each question draw the standard Demand-Supply graphs and show the effects of the following occurrences, especially effects on Price and Quantity on the respective markets.

e) Shortly, we will be talking about the Oil Crises of the 1970s. Due to rising cost of oil and related products Former President Nixon issued Executive Order 11615, a price control, and effectively imposing a 90-day freeze on prices. For this policy to be binding, do new prices have to be below or above equilibrium? If binding, does this policy lead to a surplus or shortage?

Answer 1