A Price Floor Is A Legally Mandated

Maximum price above which legal trades cannot be made.

A price floor is a legally mandated.

Minimum price below which legal trades can be made. A price floor is the lowest price that one can legally charge for some good or service. The minimum wage is a legally mandated price floor on hourly wages below which non. In the first graph at right the dashed green line represents a price floor set below the free market price.

National and local governments sometimes implement price controls legal minimum or maximum prices for specific goods or services to attempt managing the economy by direct intervention price controls can be price ceilings or price floors. Minimum price below which legal trades cannot be made. Having repealed the taxes on tacos and bungee straps the shady valley government has decided to impose price controls on both markets. Buyers and sellers are prevented from exchanging the good at any price below the legal minimum.

Minimum price at which all units of the good must be legally sold. A price ceiling is the legal maximum price for a good or service while a price floor is the legal minimum price. A price floor is a legally mandated minimum price imposed on a market. The government has mandated a minimum price but the market already bears and is using a higher price.

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. In this case the floor has no practical effect.