Econ 101 Price Floor

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Econ 101 price floor.

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. Download this econ 101 class note to get exam ready in less time. 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.

Principles of microeconomics has been evaluated and recommended for 3 semester hours and may be transferred to over 2 000 colleges and universities. Textbook chapter 6 2. 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. Price floors are used by the government to prevent prices from being too low.

Class note uploaded on feb 26 2015. 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. Course video minimum wage you can find this in the video section. Final exam ch.

The most common price floor is the minimum wage the minimum price that can be payed for labor. A price floor is the lowest legal price a commodity can be sold at. A price floor is an established lower boundary on the price of a commodity in the market.