Suppose You Live in a Community with No Price Controls

question 116

Multiple Choice

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a binding price ceiling on most products?

• A) Prices in the legal market in the community with a binding price ceiling will rise.
• B) Prices in the legal market in the community with a binding price ceiling will fall.
• C) There will be shortages in the community with a binding price ceiling.
• D) More consumers will purchase the product in the community with the price ceiling.
• E) The black market in your community will be larger than the black market in the community with the binding price ceiling.

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Definitions:

Volume

A measurement of the amount of space an object or substance occupies.

Boyle's Law

A gas law stating that the pressure of a given mass of an ideal gas is inversely proportional to its volume at a constant temperature.

Proportional

Proportional describes a relationship between two quantities where their ratio remains constant.

Compressed

The state of being pressed into less space or condensed under pressure.