Can you gauge how the market would react to a price ceiling imposed by the government? For example, concerned about the political fallout from rising gas prices, suppose that the U.S. government imposed a price ceiling of $3.00 a gallon on gasoline. Explain how the market for gasoline would react to this price ceiling if the oil-producing nations increased production and drove the equilibrium price of gasoline to $2.50 a gallon. Would the U.S. gasoline market be efficient?

Would the U.S. market be efficient in any industry if the production levels drove the equilibrium price to a different level?