What Is the Incentive to Create a Black Market When

question 10

Multiple Choice

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

• A) A black market emerges because buyers are frustrated with shortages of the product.
• B) A black market emerges because sellers have an incentive to charge a higher price on the illegal market.
• C) A black market emerges because sellers want a market where they can sell higher-quality products.
• D) A black market does not emerge; the price will eventually fall to the equilibrium price.
• E) A black market emerges because sellers need a way to dispose of surplus product.

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Definitions:

Cash Receipts

The collection of money, including coins, notes, electronic payments, and checks, received by a business during a given period.

Cash Payments

Transactions in which the payment for goods or services is made with physical currency or through an equivalent electronic form.

Not-for-Profit Sector

The not-for-profit sector comprises organizations that are aimed at serving the public interest or a specific social cause without seeking to make a profit for their owners or members.

Securities And Exchange Commission

A U.S. government agency that oversees securities transactions, markets, and investment practices to protect investors.