Price floors

Extracted Attributes

• Type

  Price control

• Mechanism

  Sets a minimum legal price

• Primary Purpose

  Prevent prices from falling too low, protect producer income

• Application Context

  Often used in agricultural and labor markets

• Potential Economic Effects

  Surpluses, lost gains from trade, wasteful increases in quality, misallocation of resources

• Condition for Effectiveness

  Must be set higher than the equilibrium price

• Common Governmental Examples

  Minimum wage laws, agricultural supply management (Canada), regulated US airfares (prior to 1978), minimum price per-drink laws for alcohol

• Common Non-Governmental Examples

  Resale price maintenance, NFL ticket resale price floor (historically)

Timeline

• Regulated US airfares served as an example of price floors. (Source: Wikipedia)

  Prior to 1978

• The NFL (National Football League) previously imposed a price floor on the resale value of tickets, a practice it has since discontinued. (Source: Web Search)

  Past (no specific date)

Price floor

A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. It is one type of price support; other types include supply regulation and guarantee government purchase price. A price floor must be higher than the equilibrium price in order to be effective. 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 influences the (equilibrium) values of economic variables will not change, often described as the point at which quantity demanded and quantity supplied are equal (in a perfectly competitive market). Governments use price floors to keep certain prices from going too low. Two common price floors are minimum wage laws and supply management in Canadian agriculture. Other price floors include regulated US airfares prior to 1978 and minimum price per-drink laws for alcohol. While price floors are often imposed by governments, there are also price floors which are implemented by non-governmental organizations such as companies, such as the practice of resale price maintenance. With resale price maintenance, a manufacturer and its distributors agree that the distributors will sell the manufacturer's product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). A related government- or group-imposed intervention, which is also a price control, is the price ceiling; it sets the maximum price that can legally be charged for a good or service, with a common government-imposed example being rent control.

Web Search Results

• Price floor - Wikipedia

  A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. It is one type of price support; other types include supply regulation and guarantee government purchase price. A price floor must be higher than the equilibrium price in order to be effective. 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 [...] Two common price floors are minimum wage laws and supply management "Supply management (Canada)") in Canadian agriculture. Other price floors include regulated US airfares prior to 1978 and minimum price per-drink laws for alcohol. While price floors are often imposed by governments, there are also price floors which are implemented by non-governmental organizations such as companies, such as the practice of resale price maintenance. With resale price maintenance, a manufacturer and its [...] An example of a price floor is minimum wage laws, where the government sets out the minimum hourly rate that can be paid for labour. In this case, the wage is the price of labour, and employees are the suppliers of labor and the company is the consumer of employees' labour. When the minimum wage is set above the equilibrium market price for unskilled or low-skilled labour, employers hire fewer workers. Employers may cut their use of labour by switching to a "self-serve" model in which customers

• Price Floor: (Definition, 4 Examples & 5 Effects)

  1. A price floor is a minimum price that the government sets on a good or service. 2. Private groups may also implement price floors, for instance, the NFL imposed a floor on the resale value of tickets – although it has now stopped doing so. 3. In economics, a price floor is most effective when is it placed above the equilibrium point as this would force prices to increase from the existing equilibrium to the desire price. [...] A price floor is where a minimum price is set for a good or service. In other words, suppliers cannot sell below that price. It is usually determined by the government, but public entities such as the NFL have been known to organize a private price floor. This is generally to protect the income and survival of the producer. [...] A price floor is a minimum price a consumer must pay for a good or service. It is usually mandated by government in order to protect businesses or provide a disincentive to consume that good. What is an example of price floor?

• Price Floors: The Minimum Wage | Microeconomics Videos

  A price floor is a minimum price allowed by law. That is, it is a price below which it is illegal to buy or sell, called a price floor because you cannot go below the floor. We're going to show that price floors create four significant effects: surpluses, lost gains from trade, wasteful increases in quality, and a misallocation of resources. We're going to go through these each in turn. [...] A price floor is a minimum price allowed by law. That is, it is a price below which it is illegal to buy or sell, called a price floor because you cannot go below the floor. We're going to show that price floors create four significant effects: surpluses, lost gains from trade, wasteful increases in quality, and a misallocation of resources. We're going to go through these each in turn.

• Price Floor: 15 Examples & Definition (2025)

  So, a price floor is a mandated cost limit put in place by the government or another organization, which prevents companies from charging too low of a price for their products, goods, commodities, and services. Definition of Price Floor A price floor is a government-mandated minimum cost that producers in an industry are allowed to charge for their goods and services(Prag, 2020). [...] A price floor is one of the leading governmental tools used to keep prices stable while ensuring that businesses remain profitable. It is most commonly used in agricultural and labor markets but can also be applied to other industries. For example, the government can establish a price floor on milk to guarantee farmers a stable income level. This political action shields producers from market fluctuations by mandating the lowest amount of money they can ask for their products. [...] So, in simple words, a price floor is a government-imposed regulation that prohibits the price of an item from falling below a certain level. 10 Examples of Price Floor

• Price Ceilings and Floors- Micro Topic 2.8 - YouTube

  something called a Price Floor Price Floors A Price Floor is a minimum price that buyers are expected to pay for a product. So let's assume that the government really wanted to help corn producers by keeping prices artificially high Let's assume that the equilibrium price for corn is