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Question
What will an individual do differently as a seller in the black market in the long run?
a. He or she will substitute away from producing the product.
b. He or she will substitute toward producing the product.
c. When there exists a binding price floor, he or she will be able to sell the good at a higher price.
d. When there exists a binding price ceiling, he or she will be able to sell the good at a lower price.
e. What he or she does as a seller in the long run will be no different from what he or she does in the short run.
Answer
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What will an individual do differently as a buyer in the black market in the long run?
a. He or she will substitute away from the product.
b. He or she will substitute toward the product.
c. When a binding price floor exists, he or she will be willing to pay a higher price.
d. When a binding price ceiling exists, he or she will be willing to pay a lower price.
e. What he or she does as a buyer in the long run will be no different from what he or she does in the short run.
Q:
What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
c. A shortage will continue to exist and will grow larger over time.
d. A shortage will continue to exist and will grow smaller over time.
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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