What is minimum price ceiling? Explain its implications?
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Price ceiling is defined as the maximum price that can be allowed for some good or service. But when the word minimum price ceiling is used it means price flooring, which is the least price that could be paid for a good or service. f the market price is lower than the price floor, then a surplus will be generated. Minimum wage laws is an example of price floors
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In a controlled socialist economy, a minimum price ceiling is a government sanctioned minimum price a product can be sold for.
Many countries set not only a maximum but even a minimum price at which a product can be sold. This is usually done in order to control the supply and demand of a product e.g. if the product is short in the market, the government tries to decrease the product's demand in the market by setting a price below which it cannot be sold.
Sometimes the government does it to control some harmful products e.g. setting a minimum price of alcohol and smoking products to restrict their demand
When a government does it, it acts against free market economics, taking matters into their own hands if they feel that the free market has failed
Many countries set not only a maximum but even a minimum price at which a product can be sold. This is usually done in order to control the supply and demand of a product e.g. if the product is short in the market, the government tries to decrease the product's demand in the market by setting a price below which it cannot be sold.
Sometimes the government does it to control some harmful products e.g. setting a minimum price of alcohol and smoking products to restrict their demand
When a government does it, it acts against free market economics, taking matters into their own hands if they feel that the free market has failed
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