Question

referring to figure 8, assume that the government fixes the price of gasoline at p1 after the hurricane so that gas stations are not permitted to sell gasoline at a price above p1. also, as occurred, assume that the supply curve shifts to the left due to the hurricane, resulting in a new equilibrium price that gas stations wish to charge. how does the price enforced by the government (p1) compare to the price gas stations wish to charge?
the government-imposed price is less than the price gas stations wish to charge after the hurricane
the government-imposed price is equal to the price gas stations wish to charge after the hurricane
the government-imposed price is greater than the price gas stations wish to charge after the hurricane
there is not enough information to answer the question.

Explanation:

1. Recall the concept of supply and demand shifts: A leftward shift of the supply curve (due to the hurricane, which likely disrupts production/supply of gasoline) leads to a new equilibrium with a higher price (since supply decreases, ceteris paribus, equilibrium price rises).
2. The government fixes the price at P1 (a price ceiling, as it's a maximum price). Before the hurricane, the equilibrium price was lower. After the hurricane, the supply curve shifts left, so the new equilibrium price (what gas stations wish to charge) is higher than the pre - hurricane price. But the government is fixing the price at P1, which was likely the pre - hurricane price or a price below the new equilibrium price. So the government - imposed price (P1) is less than the price gas stations wish to charge after the hurricane.

Answer:

The government - imposed price is less than the price gas stations wish to charge after the hurricane