Definition Of Floor Price In Economics

Definition of floor price.

Definition of floor price in economics. A price floor is the lowest amount at which a good or service may be sold and still function within the traditional supply and demand model. Examples of goods that have had price floors bestowed upon them include farm products and workers. This is usually done to protect buyers and suppliers or manage scarce resources during difficult economic times. 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.

Its aim is to increase companies interest in manufacturing the product and increase the overall supply in the market place. The lowest preconceived price that a seller will accept. By observation it has been found that lower price floors are ineffective. 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.

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. A price floor is an established lower boundary on the price of a commodity in the market. Term price floor definition. Dictionary term of the day articles subjects businessdictionary.

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. Price floors and price ceilings are government imposed minimums and maximums on the price of certain goods or services. A price floor in economics is a minimum price imposed by a government or agency for a particular. A legally established minimum price.