The 2000-2001 California energy crisis produced brownouts, utility company bankruptcies, and worries about high prices. The California electric power regulatory program imposed price ceilings on electricity sold to consumers. The following exhibit describes the California situation with PS as the price ceiling. Answer the following questions referring to this exhibit.
a. What was the loss imposed on consumers by this price ceiling?
b. What was the loss imposed on producers by this price ceiling?
c. What was the total loss imposed on California by this price ceiling?
d. Using this exhibit, explain the brownouts in California.
e. What would have to be true for consumers to support market set prices? Use the exhibit to explain why there might not be support among consumers for raising prices.