Final answer:
Imposing a price ceiling on gasoline is likely to lead to a shortage, as demand would exceed supply at the lower price point. Historical experiences, like the 1973 oil embargo, show that shifts in supply significantly impact prices and demand.
Step-by-step explanation:
When considering the market for gasoline, several factors influence consumer behavior and market dynamics. For instance, when the price of gasoline rises, consumers may choose to drive less and purchase less gasoline, adjusting their behavior to manage costs. This change in consumer behavior is reflective of the demand elasticity for gasoline.
If the government were to impose a price ceiling on gasoline, setting it at $1.30 per gallon, it is likely that demand would exceed supply at that price point, leading to a shortage in the gasoline market. A price ceiling below the market equilibrium can cause gasoline stations to run out of fuel more quickly, create long lines at pump stations, and possibly cause rationing of gasoline. Additionally, the artificially low price could lead to decreased investment in oil and gas production, exacerbating the supply issue over time.
The historical experience, such as the oil embargo by OPEC in 1973, demonstrates how shifts in the supply curve can drastically affect prices and consumption. A leftward shift of the supply curve represents a decrease in supply, leading to higher prices and lower quantity demanded, illustrated in historical figures and data.