After the OPEC oil embargo in the 1970s, price controls were placed on gas markets that did not allow price to rise to the market clearing level. Gas shortages resulted as did black markets. Use the analysis provided in Chapter 6 on the use of price controls to discuss whether price controls likely hurt or helped consumers and the economy. Consider the following:

a. Who is helped and harmed by price ceilings?

b. Had gas prices been allowed to increase sharply, would we have made changes in our economy faster? At what cost?

c. How does the elasticity of demand and supply impact the degree to which price and quantity would change in the gasoline market?