Government Set Price Floor On Earnings

Suppose the government sets the price of wheat at pf.

Government set price floor on earnings.

When government laws regulate prices instead of letting market forces determine prices it is known as price control. A price floor is government imposed limit on how low a price can be charged for a product or service. The government has set the minimum. A price floor that is set above the equilibrium price creates a surplus.

Minimum wage laws require employers to pay all employees at least the minimum wage. Example of a price floor. First enacted during the great depression in 1938 under the fair labor standards act the purpose was to ensure workers a minimum standard of living. When the government sets a price floor on earnings it is called what.

An example of a price floor in the us are minimum wage laws. Price floors prevent a price from falling below a certain level. Figure 4 8 price floors in wheat markets shows the market for wheat.