What Is The Price Floor. A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product good commodity or service. A price floor or a minimum price is a regulatory tool used by the government.
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. A price floor is the lowest legal price that can be paid in a market for goods and services labor or financial capital. A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product good commodity or service.
Price floors are used by the government to prevent prices from being too low.
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 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. The price floor means that the government imposes a lower limit on the price that may be charged for a particular good or service. What is the price floor.
