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20 March, 22:32

Before the oil embargo, the price ceiling on gasoline had no noticeable effect on the market. What is the most likely explanation for this?

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  1. 21 March, 00:37
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    When a price ceiling is imposed (or any price ceiling at all), the only way that it doesn't affect the economy is that the price set was actually equal to or higher than the equilibrium price of the market.

    I suppose that since an oil embargo was put in place, the quantity supplied of gasoline would decrease severely affecting the equilibrium price and increasing it. Once the equilibrium price is higher than the price ceiling, then its negative effects will be noticed (e. g. deadweight loss).
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