If the government removes a binding price floor from a market, then the price received by sellers will
A)decrease, and the quantity exchanged in the market will decrease.
B)decrease, and the quantity exchanged in the market will increase.
C)increase, and the quantity exchanged in the market will decrease.
D)increase, and the quantity exchanged in the market will increase.

Question

If the government removes a binding price floor from a market, then the price received by sellers will
A)​decrease, and the quantity exchanged in the market will decrease.
B)​decrease, and the quantity exchanged in the market will increase.
C)​increase, and the quantity exchanged in the market will decrease.
D)​increase, and the quantity exchanged in the market will increase.

Quizplus · Accepted Answer

A binding price floor set above the equilibrium price keeps the price artificially high, leading to a surplus. Removing it allows the price to decrease to the equilibrium level, increasing the quantity exchanged as more buyers can afford the product at the lower price.

If the Government Removes a Binding Price Floor from a Market