A Price Floor Is A Legally Imposed Price

A price floor must be higher than the equilibrium price in order to be effective.

A price floor is a legally imposed price.

A price floor is a legally imposed price. A price ceiling is a legally imposed price. Suppose 20 000 people in pennsylvania work in fast food restaurants for the federal minimum wage of 7 25 hour. If the state of pennsylvania increases its.

The equilibrium price commonly called the market price is the price where economic forces such as supply and demand are balanced and in the absence of external. A price ceiling is the legal maximum price for a good or service while a price floor is the legal minimum price. Assume that all fast food restaurants employ many minimum wage workers. Although both a price ceiling and a price floor can be imposed the government usually only selects either a ceiling or a floor for particular goods or services.

Price controls can be price ceilings or price floors. 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. The price floor acts as a minimum price that constrains the market price if the equilibrium market price would have been below the ceiling absent market intervention. The price floor acts as a minimum price that constrains the market price if the equilibrium market price would have been below the ceiling absent market intervention.

Perhaps the best known example of a price floor is the minimum wage which is based on the view that someone working full time should be able to afford a basic standard of living. Question 2 a price floor is a legally imposed price.