Econ 101 Price Floor

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Econ 101 price floor.

Course video minimum wage you can find this in the video section. 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 summary economics 101. 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.

For a price floor to be effective the minimum price has to be higher than the equilibrium price. Class note uploaded on feb 26 2015. Price floors are used by the government to prevent prices from being too low. Textbook chapter 6 2.

Final exam ch. The most common example of a price floor is the minimum wage. 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.

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. Principles of microeconomics has been evaluated and recommended for 3 semester hours and may be transferred to over 2 000 colleges and universities. Download this econ 101 class note to get exam ready in less time.