If the Government Imposes a Price Ceiling for Some Product

question 81

Multiple Choice

If the government imposes a price ceiling for some product, and a black market subsequently develops that gains control of all of the reduced output of the product, then

• A) the quantity demanded will exceed quantity supplied at the black market price.
• B) the black market price will be lower than the ceiling price.
• C) consumers will be better off than they would be in the absence of the black market.
• D) excess profits will flow back to consumers.
• E) the black market price will be higher than the free- market equilibrium price.