Question

If the government removes a binding price floor from a market, then the price paid by buyers will (A) increase, and the quantity sold in the market will increase. (B) increase, and the quantity sold in the market will decrease. (C) decrease, and the quantity sold in the market will increase. (D) decrease, and the quantity sold in the market will decrease.

Answer 1

Answer:

The correct option is A

Explanation:

Binding price ceiling is the defined or described as the one which happen or occur when the government  fixes or state the required or needed price on the goods or products and the price will be set at  a price below the equilibrium. It is done as the government want that the prices will not rise or increase above the set price and this price binds the market for that good or product.

So, if the government remove the biding price from the market, then the price which is paid by the buyers will increase as price could rise and which will return in the quantity sold will also increase in the market.