Overview
Price floors are important economic tools used by governments to ensure that certain goods and services do not fall below a minimum price. This is often done to protect producers, such as farmers or workers, from market fluctuations that could harm their income. However, while price floors can provi...
Key Terms
Example: The government sets a price floor for milk to ensure farmers receive a fair income.
Example: In a free market, the equilibrium price for apples is determined by supply and demand.
Example: A surplus of wheat occurs when the price is set too high.
Example: The demand for electric cars increases as prices decrease.
Example: The supply of oranges increases during the harvest season.
Example: Setting price floors is a form of government intervention.