Suppose Dawn lives in a community with no price controls.What would she expect to happen if her town borders a community where there is a nonbinding price floor on most products?
A) The products sold will become more plentiful.
B) The products sold will become less plentiful.
C) There will be upward pressure on the prices.
D) There will be downward pressure on the prices.
E) The price and the quantity sold in the community without a nonbinding price floor will be the same as the price and quantity in the community with a nonbinding price floor.

Question

Quizplus · Accepted Answer

A nonbinding price floor is set below the equilibrium price, so it does not affect the market. Therefore, the price and quantity sold in Dawn's community will remain the same as in the community with the nonbinding price floor.

Suppose Dawn Lives in a Community with No Price Controls