If the Government Removes a Binding Price Floor from a Market

question 167

Multiple Choice

If the government removes a binding price floor from a market, then the price paid by buyers will

• A)increase, and the quantity sold in the market will increase.
• B)increase, and the quantity sold in the market will decrease.
• C)decrease, and the quantity sold in the market will increase.
• D)decrease, and the quantity sold in the market will decrease.

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Definitions:

Effective Revocation

The successful cancellation or withdrawal of a legal right, offer, or agreement, communicated in a manner recognized by law.

Option Contract

A contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Offeror's Estate

In contract law, refers to the handling of an offeror's outstanding offers after their death, focusing on whether these offers can still be accepted.

Silence

The absence of sound or the choice to refrain from speaking or making noise.