Question

Would you rather have the forces of demand and supply determine the price of gasoline which you pay at the pump, or would you prefer a government mandated price ceiling?

Answer 1

I would le the forces of supply and demand decide the price of the Gasoline rather than the government put a price ceiling.

IF the price of the Gasoline in decided by the supply and demand forces the price will be higher than the price ceiling the government will set but at the price decided by the supply and demand forces more and more people will be able to get the product.

If the government set a ceiling it will be below the equilibrium price but at that price, the supply of the gasoline will be much lower than the required amount.Only a few people will get the Gasoline at the reduced price and others will have to go without the gasoline.

Overall the consumer surplus which the people are getting will be much lower in the case of a ceiling when compared to the surplus which they get in case of free price decided by the supply and demand.