Question

If the government removes a binding price floor from a market, then the price received by sellers will Group of answer choices decrease, and the quantity sold in the market will decrease decrease, and the quantity sold in the market will increase increase, and the quantity sold in the market will decrease. increase, and the quantity sold in the market will increase.

Answer 1

Answer:

decrease, and the quantity sold in the market will decrease decrease,

Explanation:

Price floor is set by the government or an agency of the government and it is the minimum price that a good or service must be sold.

A price floor is binding if it is set above equilibrium price.

If a binding price floor is removed, price would fall back towards equilibrium and the quantity sold would decrease.

The fall in quantity supplied is in line with the law of supply which says the higher the price, the higher the quantity supplied and the lower the price , the lower the quantity supplied.

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