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Question
A nonbinding price floor has which of the following consequences?
a. There will be downward pressure on prices until quantity demanded equals quantity supplied.
b. There will be upward pressure on prices until quantity demanded equals quantity supplied.
c. There are no consequences to a nonbinding price floor.
d. The quantity demanded will always exceed the quantity supplied.
e. The quantity demanded will always be smaller than the quantity supplied.
Answer
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What is the long-run consequence of a price ceiling law?
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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