Suppose you live in a community with no price controls. What do you expect to happen if yourtown borders a community where there is a binding price floor on most products? Prices in the legal market in the community with a binding price floor would fall. There would be smaller surpluses in the community with a binding price floor. More consumers would purchase the product in the community without a price floor. The black market in the community with a binding price floor would be larger. Sales of the product in the community with a binding price floor would increase.

A binding price floor is a type of price control in which the government sets the price of the good…

Answered: Suppose you live in a community with no…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter4: Markets In Action

Section: Chapter Questions

Problem 13SQ

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Suppose you live in a community with no price controls. What do you expect to happen if your
town borders a community where there is a binding price floor on most products?

		Prices in the legal market in the community with a binding price floor would fall.
		There would be smaller surpluses in the community with a binding price floor.
		More consumers would purchase the product in the community without a price floor.
		The black market in the community with a binding price floor would be larger.
		Sales of the product in the community with a binding price floor would increase.

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