A “black market” is a place where people make illegal trades in goods and services. For instance, during the Soviet era, it was common for American tourists to take a few extra pairs of Levi’s jeans when visiting the Soviet Union:

They would sell the extra pairs at high prices on the illegal black market.

Consider the following claim: “Pricecontrolled markets tend to create black markets.” Let’s illustrate with the figure below.

If there is a price ceiling in the market for cancer medication of $50 per pill, what is the widest price range within which you can definitely find both a buyer and a seller who would be willing to illegally exchange a pill for money? (There is only one correct answer.)

Transcribed Image Text:

Price of cancer medication Supply $160 100 50 100 Demand Quantity of cancer medication