Producers may supply an inefficiently low quality of a good if the government imposes:
A)a price control.
B)an excise tax.
C)a binding price floor.
D)a binding price ceiling.

Question

Quizplus · Accepted Answer

A binding price ceiling sets a maximum price that producers can charge, which may be below the market equilibrium price. This can lead to a shortage of the good or service, and producers may supply a lower quality product to meet the lower price point.

Producers May Supply an Inefficiently Low Quality of a Good