If a good is subject to a binding price floor and someone purchases it on the bl

Question

If a good is subject to a binding price floor and someone purchases it on the black market, what would he or she expect to happen to the availability of the good over time? The availability of the good will fall over time as the supply curve becomes more elastic and the demand curve becomes more inelastic. (The surplus of the good will fall.) The availability of the good will fall over time as both the supply and demand curves become more elastic. (The surplus of the good will fall.) The availability of the good will rise over time as both the supply and demand curves become more elastic. (The surplus of the good will rise.) The availability of the good will fall over time as the demand curve becomes more elastic and the supply curve becomes more inelastic. (The surplus of the good will fall.) The availability of the good will not change over time.

Explanation / Answer

c is the correct option

Reason

Due to the presence of the black market, people are going to buy it from the black market at a lower cost, thus the availability will rise and the total surplus will rise due to market equilibrium.

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