Example Of A Price Floor. By observation it has been found that lower price floors are ineffective. Price floors impose a minimum price on certain goods and services.
This helps to stabilize the farmers income so that they are not discouraged from producing more. The price floors are established through minimum wage laws which set a lower limit for wages. Price floor has been found.
Minimum wage is an example of a wage floor and functions as a minimum price per hour that a worker must be paid as determined by federal and state governments.
Small farmers are very sensitive to changes in the price of farm products due to thin margins. They are usually put in place to protect vulnerable suppliers. 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. 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.
