What Is the Incentive to Create a Black Market When

question 130

Multiple Choice

What is the incentive to create a black market when a binding price ceiling exists?

• A) A black market emerges because sellers have a surplus that they need to sell.
• B) A black market emerges because sellers want a market where they can sell lower-quality products.
• C) A black market emerges because sellers want a market where they can sell higher-quality products at higher prices.
• D) A black market does not emerge because sellers are content to sell at the lower price.
• E) A black market emerges because buyers who have a low opportunity cost are seeking out the product.

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Definitions:

Limited Liability Company

An enterprise structure that fuses the tax handling advantages of partnerships or sole proprietorships with the limited liability feature of corporations.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders. Corporations enjoy many of the rights and responsibilities that individuals possess.

Corporate Double Taxation

A tax principle where a corporation's income is taxed at both the corporate level and again as shareholder dividends at the personal level.

Personal Liability

The responsibility of an individual to bear the loss or to repay the debt from their own assets.