Question

Black markets may develop as a result of price controls because: individuals can profit by illegal exchanges. price controls increase efficiency. quantity demanded equals quantity supplied at the mandated price. price controls offer subsidies for market transactions.

Answer 1

Answer:

individuals can profit by illegal exchanges.

Explanation:

The closest correct answer is that a black market is most of the time very profitable, because prices tend to be higher than they would be without the black market, and without the price controls.

The reason why black markets emerge when price controls are imposed is because price controls do not allow prices to equilibrate supply and demand, meaning that under a price control, supply falls short of demand, causing scarcity for consumers.

This scarcity can be solved by the black market with higher prices.