If Firms Are Unable to Lower Prices Because of a Legally

question 287

Multiple Choice

If firms are unable to lower prices because of a legally mandated price floor, then:

• A) firms are better off (higher profits) at the expense of consumers.
• B) firms will often compete by offering higher-quality goods than consumers are willing to pay for.
• C) consumers will decrease their demand due to the high prices.
• D) quantity supplied will be less than quantity demanded.