The price paid by buyers in a market will increase if the government
(i)Increases a binding price floor in that market.
(ii)Increases a binding price ceiling in that market.
(iii)Decreases a tax on the good sold in that market.

Question

Quizplus · Accepted Answer

Increasing a binding price floor raises the minimum price buyers must pay, while increasing a binding price ceiling has no effect as it is already non-binding. Decreasing a tax would lower the price paid by buyers, not increase it.

The Price Paid by Buyers in a Market Will Increase