Suppose an Effective Price Floor Is Imposed in a Market

question 55

Multiple Choice

Suppose an effective price floor is imposed in a market and leads to the development of an illegal black market for the product. How would the price in the black market compare to the price of the product in the legal market, which has an effective price floor?

• A) The black market price will be higher.
• B) The black market price will be lower.
• C) The black market price will be the same but the quantity sold will be higher.
• D) The black market price will be the same but the quantity sold will be lower.

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Definitions:

Secret Society

An organization operating in secrecy, with its membership, ceremonies, and activities hidden from non-members, often for cultural, religious, or political purposes.

IWW Leader

A significant figure in the Industrial Workers of the World, a labor union known for advocating workers' rights and socialism.

"Big" Bill Haywood

A prominent figure in the American labor movement, co-founder of the Industrial Workers of the World (IWW), known for his advocacy for workers' rights and socialism.

Kremlin

The official residence of the President of the Russian Federation and a historic fortified complex at the heart of Moscow, symbolizing Russian political power.