A positive markup is earned by a firm if its A) price exceeds ...

[WWatsford]

A positive markup is earned by a firm if its
 
  A) price exceeds its marginal cost.
  B) marginal revenue equals marginal cost.
  C) price equals marginal cost.
  D) price equals average total cost.

Question 2

What is a black market and how does it influence the market for rental housing if a rent ceiling creates a housing shortage? What determines the level of the black market rent?
 
  What will be an ideal response?

[kmb352]

Answer to Question 1

A

Answer to Question 2

A black market is an illegal market in which the price exceeds the legally imposed price ceiling. When a rent ceiling creates a housing shortage, frustrated renters offer a rent above the legal level in order to get an apartment. The level of the black market rent depends on how tightly the rent ceiling is enforced. With loose enforcement, the black market rent is close to the unregulated rent. With strict enforcement, it is close to the maximum price that renters are willing to pay given the rent-ceiling quantity of housing supplied.

[WWatsford]

Thanks for the timely response, appreciate it

[juliaf]

Excellent