What Is the Incentive to Create a Black Market When

question 130

Multiple Choice

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

• A) A black market emerges because sellers have a surplus that they need to sell.
• B) A black market emerges because sellers want a market where they can sell lower-quality products.
• C) A black market emerges because sellers want a market where they can sell higher-quality products at higher prices.
• D) A black market does not emerge because sellers are content to sell at the lower price.
• E) A black market emerges because buyers who have a low opportunity cost are seeking out the product.

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Definitions:

"The Invisible Hand"

A term coined by Adam Smith to describe the self-regulating nature of the marketplace.

Government Planning

It involves strategies and policies implemented by a government to achieve specific economic, social, or environmental goals.

Private Ownership

The holding of property by non-governmental legal entities or individuals, allowing for control over assets and their use within the confines of the law.

Entrepreneurial Ability

Ability to recognize a business opportunity and successfully set up a business firm to take advantage of it.