Question

The price paid by buyers in a market will decrease if the government a. increases a binding price floor in that market. b. increases a binding price ceiling in that market. c. decreases a tax on the good sold in that market. d. All of the above are correct.

Answer 1

Answer:

C) decreases a tax on the good sold in that market.

Explanation:

If the government lowers taxes, then the price of goods should always decrease.

Option A is wrong because a price floor sets a minimum price, and if it increases, the price paid by consumers will increase.

Option B is wrong because a price ceiling sets a maximum price, and if it increases, the price paid by consumers will increase.