ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -True. An example of price floors is the minimum wage law in the labour market, where government, in order to protect the suppliers and interests of laborers, mandates a wage floor or minimum wage. Q.

Detailed explanation-2: -Minimum wage is an example of a price floor as the wage or the price of labour cannot go below this level.

Detailed explanation-3: -A price floor is the lowest legal price that can be paid in a market for goods and services, labor, or financial capital. Perhaps the best-known example of a price floor is the minimum wage, which is based on the normative view that someone working full time ought to be able to afford a basic standard of living.

Detailed explanation-4: -Answer and Explanation: The correct option is: D. It will be located above the equilibrium price. This option is true because a price floor must be set at a price level which is above the equilibrium price in the market.

Detailed explanation-5: -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.