Question

If a price floor is not binding, then A. there will be a shortage in the market. B. there will be no effect on the market price or quantity sold. C. the market will be less efficient than it would be without the price floor. D. there will be a surplus in the market

Answer 1

Answer:

The correct answer is A

Explanation:

Price floor, also referred to as the minimum price, which is described as the lower limit placed by the regulatory authority or the government on the price which is per unit of the product or the commodity.

Non- binding price floor, means that the price floor is less than the present price of the market, and the equilibrium price will be more or above the price floor.

So, when the price floor is not binding, then the market will be shortage or less than from the present price.