Draw supply and demand graph showing the initial equilibrium

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A hurricane hits the Gulf Coast and completely shuts down much of the refining capacity for some time. Consider the market for gasoline.

Part 1: Draw supply and demand graph showing the initial equilibrium, any supply and/or demand shift, and new equilibrium.

Part 2: Based on the analysis from Part 1, the president decides to set a price ceiling on the price of gasoline until the refining capacity is restored. The price ceiling is set at the initial equilibrium price (the price that was observed before the hurricane). Draw a supply and demand graph this market with the imposed price ceiling. Is there a surplus and/or shortage created by this policy? If so, identify graphically.

Reference no: EM131245957

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