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

Question

Quizplus · Accepted Answer

A binding price ceiling sets a maximum price that can be charged for a good or service. If the government removes the price ceiling, then sellers are free to charge a higher price. This will increase the price received by sellers (as per the law of supply) and also encourage more sellers to enter the market, increasing the quantity sold. Hence, the correct answer is that the price received by sellers will increase, and the quantity sold in the market will increase (option D).

If the Government Removes a Binding Price Ceiling from a Market,then