Suppose the Government Decides to Eliminate a Binding Price Floor

Multiple Choice

Suppose the government decides to eliminate a binding price floor that it had previously imposed on a particular good. It can be expected that

A) the price would increase, the quantity demanded would decrease and the quantity supplied would increase.
B) the price would decrease, the quantity demanded would increase and the quantity supplied would decrease.
C) the price would increase, the quantity demanded would increase and the quantity supplied would decrease.
D) the price would decrease, the quantity demanded would decrease and the quantity supplied would increase.
E) no changes would take place.