Price controls often generate
A) more efficient markets.
B) black markets.
C) rapid adjustment to market-clearing prices.
D) greater price flexibility.

Question

Quizplus · Accepted Answer

Price controls, such as maximum prices set below market-clearing prices, incentivize suppliers to reduce production or exit the market, leading to shortages. In response, buyers may turn to illegal suppliers or "black markets" where prices and quality are not regulated. Therefore, price controls often generate black markets.

Price Controls Often Generate