The gasoline market garners considerable attention because gas prices affect our ability to commute and travel, we also see the prices posted on big signs, the price changes regularly, and the market is noticeably affected by natural events. Consider the market for gasoline.

Sketch a supply and demand graph for gas. Next, illustrate on the graph what would happen in the market for gas if a hurricane temporarily knocked out a gas pipeline to a region. In a third graph, demonstrate the outcome of a binding price ceiling in the market for gas (following the hurricane). what would be a good description of how the price ceiling affects the outcome? Finally, gas is subject to a per gallon tax at the pump (that is, it is assessed on the demand side). Illustrate how the tax affects the market in the face of the hurricane and price ceiling.