A price ceiling on tickets creates
A) excess demand, which creates gray and black markets.
B) excess supply, which causes prices to fall.
C) excess demand, which cause prices to fall.
D) excess supply, which causes gray and black markets.

Question

Quizplus · Accepted Answer

When a price ceiling is set on tickets, it limits the price at which the tickets can be sold. This often results in a situation where the demand for tickets exceeds the supply, leading to excess demand. As a result, many buyers are unable to purchase tickets at the regulated price, creating a secondary market where tickets are sold at a higher price. This secondary market can be legal or illegal (gray or black), and it often results in a further increase in the price of tickets. Therefore, a price ceiling on tickets creates excess demand, which leads to gray and black markets.

A Price Ceiling on Tickets Creates