Price Ceilings and Floors: End of Chapter Problem During a crisis, such as after a hurricane, governments often make it illegal to raise the price of emergency items like flashlights and bottled water. In practice, this means that these items get sold on a first-come, first-served basis.
If a person has a flashlight that she values at $5, but its price on the black market is $40, what gains from trade are lost if the government shuts down the black market? Lost gains from trade: $ emergency?