Producers will 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 below the equilibrium, leading to shortages and incentivizing producers to supply lower quality goods to maintain profitability.

Producers Will Supply an Inefficiently Low Quality of a Good