If a Good Is Subject to a Binding Price Ceiling

question 86

Multiple Choice

If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the price over time?

• A) The black market price will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.
• B) The black market price will fall over time as both the supply and demand curves become more inelastic.
• C) The black market price will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.
• D) The black market price will fall over time as both the supply and demand curves become more elastic.
• E) The black market price will not change over time.

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Definitions:

Salvador Allende

The first Marxist to become president of a Latin American country through open elections, serving as President of Chile from 1970 until his death in 1973.

Nixon Administration

The executive leadership and period of U.S. government under President Richard Nixon, from 1969 to 1974, marked by significant events such as the Vietnam War and the Watergate scandal.

Chilean Military

The armed forces of Chile, consisting of the Army, Navy, and Air Force, responsible for the defense of the country.

Mark W. Felt

An Associate Director of the FBI who was later revealed to be the informant known as "Deep Throat," providing crucial information about the Watergate scandal to the press.