ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A price floor occurs in a market when government imposes a minimum price that is above equilibrium. The mandated price functions as a “floor” because it prevents the buyers and sellers from negotiating lower prices and reaching equilibrium.

Detailed explanation-2: -A price floor is an established lower boundary on the price of a commodity in the market. Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity.

Detailed explanation-3: -Taxes, subsidies, price controls, regulations, minimum wage legislation, and government bailouts are all examples of different kinds of government intervention in the economy.

Detailed explanation-4: -Description: Government imposes a price ceiling to control the maximum prices that can be charged by suppliers for the commodity. This is done to make commodities affordable to the general public.