The Invisible Hand

Picture source

From the transcript of the voice mail from Les Singer, we know that there is a high gas price and that the government is trying to control the gas price.  We also know that people are worried that a price ceiling caused by the government pushing down gas prices would produce shortages so that not everyone will be able to get gas.  What we do not know, on the other hand, is why there is a shortage in gas.  We also do not know the ranking system of priority groups in which high-priority groups get all the gas they want, medium-priority groups get most of the gas they want, and low-priority groups will get any gas that is left.  The problem statement, therefore, is as follows:  How can we, as a Policy Group of the Department of Energy, set the price of gas so that different priority groups are supplied with enough gas to satisfied their demand.

Update:

Once the above problem is solved, the next problem statement based on Les Singer’s email is as follows: How can we, as a Policy Group of the Department of Energy, explain the effects of price ceilings on the laws of supply and demand, so that Les Singer will understand and be able to explain that price ceilings will cause shortages.

---