Econ 101 Price Floor

Final exam ch.

Econ 101 price floor.

Textbook chapter 6 2. A price floor is an established lower boundary on the price of a commodity in the market. Class note uploaded on feb 26 2015. Price floors defines minimum price price ceilings.

Principles of microeconomics has been evaluated and recommended for 3 semester hours and may be transferred to over 2 000 colleges and universities. The most common price floor is the minimum wage the minimum price that can be payed for labor. For a price floor to be effective the minimum price has to be higher than the equilibrium price. Price floors are used by the government to prevent prices from being too low.

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

This is a combination of news items. Course summary economics 101. A price floor is the lowest legal price a commodity can be sold at.