Question

A black market is a market in which illegal sales take place between buyers and sellers....

A black market is a market in which illegal sales take place between buyers and sellers. How is price gouging different from black market transactions?

Please explain with examples if possible

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Answer #1

The black market is illegal in the market. Since it is against the law as in the black market, unreported transactions are carried out at inflated prices.

Price gouging occurs when a producer charges the inflated price of essential items through the time of crisis or when a shortage of essential items rises. The inflated price reduces the wastage of goods and needy people are able to purchase the essential items.

government might declare the practice of gouging the illegal. If the price gouging is declared illegal, there will be rise in the black market transactions as the demand is too high relative to the supply.

Thus, gouging could be legal or illegal but black market is illegal. The black market is result of price gouging being declared illegal by the government.

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