Compare and contrast the market prices that will emerge

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Reference no: EM133380687

Questions: Consider the following three schemes for the overall restriction of gasoline consumption, assuming that the amount of gasoline available on the market will be the same for each case.[Note: in all cases there is no restriction on price]

a. Rationing of gasoline consumption (C coupons per driver for G gallons per coupon) with no trading of coupons

b. Coupons like a. but with free trading of coupons allowed.

c. Quota restrictions on gasoline production (quotas not tradable]; free market for gasoline, no rationing.

Compare and contrast the market prices that will emerge under each of these schemes, drawing graphs when possible to illustrate.

Can you be sure that b. is better than a.? Explain.

What, if any, is the difference between b. and c.? Explain.

the three cases are on quantity control. It is just that for a and b the government limit the quantity of coupons that the consumer can have; while in c the gov limit the quantity of gasoline that the producer can sell "produce"

Reference no: EM133380687

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