In the aftermath of 2012's Hurricane Sandy, there was a lack of gasoline for consumers to purchase in New York and New Jersey

Marketing Dec 28, 2020

In the aftermath of 2012's Hurricane Sandy, there was a lack of gasoline for consumers to purchase in New York and New Jersey. Lines were common, as there was significant demand for whatever gas was available. Sellers could have found ways to deliver their product, though may have had to charge more.

What was the problem with this market that prevented producers from delivering gasoline to consumers?

Expert Solution

There was a market failure for gasoline as a result of the binding price ceiling imposed by the government. The price ceiling prevented sellers from providing/delivering new supply of gasoline due to its additional cost. As a result, consumers are not able to purchase the quantity that they need resulting to a shortage (and a lot of dissatisfied consumers).

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