The price received by sellers in a market will decrease if the government

Answer

A. imposes a binding price floor in that market.

B. decreases a binding price ceiling in that market.

C. decreases a tax on the good sold in that market.

D. increases a binding price floor in that market.

whats the answer?

To answer this question, we need to understand the factors that impact the price received by sellers in a market. Let's evaluate each option one by one:

A. Imposes a binding price floor in that market.
A price floor is a government-imposed minimum price that cannot be legally lowered. A binding price floor is set above the equilibrium price determined by market forces. In this scenario, sellers would be able to set their prices above the equilibrium price, resulting in a higher price received. Therefore, option A is incorrect as it suggests that the price would decrease.

B. Decreases a binding price ceiling in that market.
A price ceiling is a government-imposed maximum price that cannot be legally exceeded. If a binding price ceiling is in place, sellers are forced to lower their prices below the equilibrium price. If the government decreases this ceiling, sellers would then have the ability to raise their prices closer to the equilibrium price, resulting in a higher price received. Therefore, option B is also incorrect as it suggests that the price would decrease.

C. Decreases a tax on the good sold in that market.
When the government decreases a tax on a good, it effectively reduces the costs for producers. With lower costs, sellers can offer their products at a lower price, and still maintain their desired profit margin. Therefore, reducing a tax on the goods sold in that market would lead to a decrease in the price received by sellers. Thus, option C is correct.

D. Increases a binding price floor in that market.
As discussed earlier, a binding price floor would lead to a higher price received by sellers. Increasing a binding price floor would further raise the minimum price that sellers can charge, resulting in an even higher price received. Therefore, option D is incorrect as it suggests that the price would increase, not decrease.

In conclusion, the correct answer is option C. The price received by sellers in a market will decrease if the government decreases a tax on the goods sold in that market.

The correct answer is A. imposes a binding price floor in that market.

When the government imposes a binding price floor in a market, it sets a minimum price at which the good or service must be sold. This means that sellers cannot sell the good or service below this floor price. As a result, the price received by sellers will decrease because they are not able to sell at the higher price that would be determined by market forces.