Let's say that you have a friend who was caught illegally buying a good on the black market.When the judge asks you to describe your friend's motivation as a buyer,which of the following would most likely be your reply?
A) My friend bought the good on the black market because a binding price floor had created a shortage in the legal market and my friend really needed the good.
B) My friend bought the good on the black market because a price ceiling caused the price to be lower on the black market.
C) My friend bought the good on the black market because a non-binding price floor had created a shortage on the legal market and my friend really needed the good.
D) My friend bought the good on the black market because a binding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.
E) My friend bought the good on the black market because a non-binding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.

Question

Quizplus · Accepted Answer

This choice describes a situation in which a binding price floor makes the good too expensive to purchase on the legal market and it becomes cheaper on the black market. This provides a clear motivation for a buyer to turn to the black market to purchase the good. The other choices either do not provide a clear motivation or describe situations that are not typical of black market activity.

Let's Say That You Have a Friend Who Was Caught