Exhibit 4-3 Refer tо Exhibit 4-3. If price P1 is а price ceiling, then
Situаtiоn 4-1 During the winter оf 1973-74, а generаl system оf wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. Because price controls were in effect at the time the embargo occurred, an economist would have most likely predicted that