What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?
A) Both the quality and the size of the product will decrease.
B) The quality of the product will increase but the size of the product will decrease.
C) Both the quality and the size of the product will increase.
D) The quality of the product will decrease but the size of the product will increase.
E) Neither the quality nor the size of the product will be affected.

Question

Quizplus · Accepted Answer

When a product is sold under a binding price ceiling, the producer is not able to charge the market price and hence has to reduce the quality and size of the product to maintain profitability. As a result, both the quality and size of the product will decrease.

What Would You Expect the Consequences to Size and Quality