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Question
As a seller of a product subject to a binding price floor, Makayla would be better off in which of the following situations?
a. Makayla would be better off under a binding price floor because she would be able to sell all that she produces at a higher price.
b. Makayla would be better off under a binding price floor because she would be able to sell goods that are smaller and cost less to produce.
c. Makayla would be better off under a binding price floor because she would be able to sell goods of lower quality, which cost less to produce.
d. Makayla would be better off under a binding price floor because she could sell any of the resulting surplus to the government.
e. There is no scenario where a seller is better off when selling a good that is subject to a binding price floor.
Answer
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Related questions
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What is the long-run consequence of a price ceiling law?
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b. A surplus will continue to exist and will grow smaller over time.
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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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