Yes, to some extent President Biden is right in telling them to lower the price rate because due to the war, a lot of gas companies a using it as a yardstick to inflate their prices and sell above the normal rate they bought it and the oil firms needs to consider the times that people are too.
2. The effect of a government price ceiling on gasoline of $2.50 a gallon is shown in the image attached. There is a binding at $2.00.
3. As price increases, demand also increases in times of gasoline because due to the war, Russia have refuse selling their oil and as such, this has lead to increase demand on the gasolines on ground.
What is Binding Price Ceiling?
A binding price ceiling is one that often takes place if the government are known to have set up a standard price on a good or goods at a specific price that is below equilibrium.
Therefore, to the number one question, we respond Yes, to some extent President Biden is right in telling them to lower the price rate because due to the war, a lot of gas companies a using it as a yardstick to inflate their prices and sell above the normal rate they bought it and the oil firms needs to consider the times that people are too.
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