Definition Of Floor Price In Economics

Price floor is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.

Definition of floor price in economics.

The lowest preconceived price that a seller will accept. A price floor in economics is a minimum price imposed by a government or agency for a particular. Perhaps the best known example of a price floor is the minimum wage which is based on the normative view that someone working full time ought to be able to afford a basic standard of living. Term price floor definition.

Examples of goods that have had price floors bestowed upon them include farm products and workers. A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital. Definition of floor price. By observation it has been found that lower price floors are ineffective.

Its aim is to increase companies interest in manufacturing the product and increase the overall supply in the market place. Prices below the price floor do not result in an. Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services. 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.

A legally established minimum price. Pressured by special interest groups our beloved government is often convinced that the price of a good needs to be kept at a higher level. Price floor is a price control typically set by the government that limits the minimum price a company is allows to charge for a product or service. Dictionary term of the day articles subjects businessdictionary.