A Price Floor Is A Legally Mandated

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.

A price floor is a legally mandated.

Minimum price below which legal trades cannot be made. A price floor is a government mandated a. A minimum wage is the lowest wage per hour that a worker may be paid as mandated by federal law. 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.

Maximum price above which legal trades cannot be made. Minimum price at which all units of the good must be legally sold. Having repealed the taxes on tacos and bungee straps the shady valley government has decided to impose price controls on both markets. In this case the floor has no practical effect.

A price ceiling is the legal maximum price for a good or service while a price floor is the legal minimum price. In the first graph at right the dashed green line represents a price floor set below the free market price. A price floor could be set below the free market equilibrium price. A price floor is a legally mandated minimum price imposed on a market.

Buyers and sellers are prevented from exchanging the good at any price below the legal minimum. A price floor is the lowest price that one can legally charge for some good or service.