What will happen in a market where a binding price floor is removed?
A) The products sold will become scarcer.
B) There will be upward pressure on the prices.
C) There will be downward pressure on the prices.
D) The price or quantity of the product sold in the legal market will not change.
E) There will be increased pressure to buy and sell the good on the black market.

Question

Quizplus · Accepted Answer

Removing a binding price floor will result in a market where there is no longer a minimum price that can be charged for the product. This is likely to result in downward pressure on prices as sellers compete to attract buyers. As a result, prices are likely to fall in the absence of the price floor.

What Will Happen in a Market Where a Binding Price