If there was a shortage in a particular market, which of the following is least likely to happen if the market is allowed to operate freely? Please select all that apply.
A) A permanent black market would form
B) Prices would rise to choke off the excess demand
C) In the long run supply would increase to eradicate the shortage
D) Prices will fall

Question

Quizplus · Accepted Answer

A permanent black market is least likely to form in a freely operating market because shortages typically encourage market adjustments such as price increases or increased supply, which alleviate the need for a black market. Prices falling (D) is also unlikely in the face of a shortage, as the basic economic principle of supply and demand suggests that prices rise when demand exceeds supply, not fall.

If There Was a Shortage in a Particular Market, Which