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Question
What will happen in a market where a nonbinding price floor is removed?
a. The products sold will become more plentiful.
b. The price or quantity of the product sold on the legal market will not change.
c. There will be upward pressure on the prices.
d. There will be downward pressure on the prices.
e. There will be increased pressure to buy and sell the good on the black market.
Answer
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What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
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Q:
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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