Question

Explain the meaning and need for 'Price floor'

Answer 1

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$\textsf{\pink{Q.}}$ Explain the meaning and need for 'Price floor'.

$\textsf{\pink{Ans.}}$ Price floor means that producers are not allowed to sell the good or service below some price fixed by the government.
The need for price floor arises when government find start the equilibrium price is too low for the producers.

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Answer 2

Definition: 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. By observation, it has been found that lowerprice floors are ineffective. Price floor has been found to be of great importance in the labour-wage market.