Suppose the government decides to eliminate a binding price floor that it had previously imposed on a particular good.It can be expected that
A)the price would increase,the quantity demanded would decrease and the quantity supplied would increase.
B)the price would increase,the quantity demanded would increase and the quantity supplied would decrease.
C)the price would decrease,the quantity demanded would decrease and the quantity supplied would increase.
D)the price would decrease,the quantity demanded would increase and the quantity supplied would decrease.
E)no changes would take place.

Question

Quizplus · Accepted Answer

Eliminating a binding price floor allows the price to fall to the equilibrium level, leading to an increase in quantity demanded and a decrease in quantity supplied.

Suppose the Government Decides to Eliminate a Binding Price Floor