A Price Floor 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.

A price floor is a legally imposed price.

A price floor provides a bottom limit think of a physical floor in a room for a price. A price ceiling is a legally imposed price. A price floor is a legally imposed 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 ceiling is the legal maximum price for a good or service while a price floor is the legal minimum 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.

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 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. Question 2 a price floor is a legally imposed price. A price floor is the lowest price that one can legally charge for some good or service.

If the state of pennsylvania increases its. A price floor must be higher than the equilibrium price in order to be effective.