The imposition of price ceilings on a market often results in
A)an increase in investment in the industry.
B)a persistent surplus in the market.
C)the diversion of income toward black-market suppliers.
D)lower prices being offered on the black market.

Question

Quizplus · Accepted Answer

Price ceilings, when set below the market equilibrium price, can lead to shortages as demand exceeds supply at the artificially low price. This can incentivize consumers to turn to black-market suppliers, who charge higher prices not bound by the ceiling, thus diverting income towards these suppliers.

The Imposition of Price Ceilings on a Market Often Results