If the government removes a binding price floor 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 floor 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 floor (a minimum price above the equilibrium price) allows the price to decrease to the market equilibrium, increasing the quantity exchanged as more buyers and sellers can participate at the lower price.

If the Government Removes a Binding Price Floor from a Market