What is a price floor? Give and describe an example of a price floor in real...

What is a price floor? Give and describe an example of a price floor in real world applications.

Expert Solution

Price floor is a situation where the price charged is more or less than the equilibrium price determined by the demand and supply forces on the market. From experiment, the lower price floors have been found to be unsuccessful. Price floor has been found to be of great importance in the labour-wage market

A price floor is the lowest price for some good or service that one can legally pay for. Maybe a price floor's best-known example is the minimum wage, which is based on the view that someone working full time should be able to afford a basic living standard. In 2016, the federal minimum wage was $7.25 an hour, though some states and localities have a higher minimum wage. The minimum federal wage provides an annual salary of $15,080 for a single individual, which is significantly higher than the $11,880 Federal poverty line. As the cost of living rises over time, the Congress periodically raises the federal minimum wage.

Rahul Sunny answered 1 year ago

What is a price ceiling? Give and describe an example of a price ceiling in real...

What is a price ceiling? Give and describe an example of a price ceiling in real world applications.

Define price ceiling and price floor and give an example of each. Which leads to a...

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Define a price floor and how it affects resource allocation in a market. Give a real...

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