Suppose that a binding price floor is in place in a particular market. If the market is deregulated and the price floor is removed:
A) the quantity demanded will decrease and the quantity supplied will increase.
B) excess demand will develop.
C) the quality of the good supplied will decrease.
D) the quality of the good supplied will improve.

Question

Quizplus · Accepted Answer

When a binding price floor is removed, the price can fall to the equilibrium level, leading to a decrease in the quality of the good supplied as producers may cut costs to remain competitive.

Suppose That a Binding Price Floor Is in Place in a Particular