Econ 101 Price Floor

Price floors are also used often in agriculture to try to protect farmers.

Econ 101 price floor.

Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity. Final exam ch. Terms in this set 7 price floor a price floor is a government set price above equilibrium price it is a tax on consumers and a subsidy to producers. Price floors are used by the government to prevent prices from being too low.

A price floor is an established lower boundary on the price of a commodity in the market. For a price floor to be effective the minimum price has to be higher than the equilibrium price. Price floors defines minimum price price ceilings. Course video minimum wage you can find this in the video section.

This is a combination of news items. A price floor is the lowest legal price a commodity can be sold at. The most common price floor is the minimum wage the minimum price that can be payed for labor. For example many governments intervene by establishing price floors to ensure that farmers make enough money by guaranteeing a minimum price that their goods can be sold for.

Download this econ 101 class note to get exam ready in less time. Textbook chapter 6 2. Class note uploaded on feb 26 2015.