Suppose you live in a community with no price controls.What do you expect to happen if your town borders a community where there is a non-binding price floor on most products?
A) The products sold will become more plentiful.
B) The products sold will become less plentiful.
C) There will be upward pressure on the prices.
D) There will be downward pressure on the prices.
E) The price and the quantity sold in the community without a non-binding price floor will be the same as the price and quantity in the community with a non-binding price floor.

Question

Quizplus · Accepted Answer

A non-binding price floor is set below the equilibrium price, so it does not affect the market. Therefore, the price and quantity sold in the community without a price floor will remain the same as in the community with a non-binding price floor.

Suppose You Live in a Community with No Price Controls