If the government removes a binding price ceiling from a market, then the price paid by buyers will
A)increase, and the quantity exchanged will increase.
B)increase, and the quantity exchanged will decrease.
C)decrease, and the quantity exchanged will increase.
D)decrease, and the quantity exchanged will decrease.

Question

If the government removes a binding price ceiling from a market, then the price paid by buyers will
A)​increase, and the quantity exchanged will increase.
B)​increase, and the quantity exchanged will decrease.
C)​decrease, and the quantity exchanged will increase.
D)​decrease, and the quantity exchanged will decrease.

Quizplus · Accepted Answer

Removing a binding price ceiling allows the market price to rise to the equilibrium level, leading to an increase in both the price paid by buyers and the quantity of goods exchanged as the market moves from a shortage to equilibrium.

If the Government Removes a Binding Price Ceiling from a Market