If government decides to control the amount of a good allowed into a market, this will:
A)result in an increase in efficiency in the market.
B)increase incentives for market participants to engage in illegal or black market activities.
C)result in the equilibrium quantity being produced.
D)lead to more of the good being produced.

Question

Quizplus · Accepted Answer

If the government decides to control the amount of a good allowed into a market, it will create a shortage, leading to increased demand and higher prices. This, in turn, increases incentives for market participants to engage in illegal or black market activities such as smuggling, hoarding or counterfeiting. Therefore choice B is the most appropriate answer.

If Government Decides to Control the Amount of a Good