Like price ceiling price floor is also a measure of price control imposed by the government.
Price floor quizlet.
A price floor is the lowest legal price that can be paid in markets for goods and services labor or financial capital.
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A government law that makes it illegal to charger lower than the specified price.
The result of a binding price floor is.
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Quantity supplied at the price floor exceeds the amount at the equilibrium price and quantity demanded is less than the amount at the equilibrium price.
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Quantity demanded at the price ceiling exceeds the amount at the equilibrium price and quantity supplied is less than the amount at the equilibrium price.
It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price.
The price ceiling is below the equilibrium price.
Binding price floors encourage the formation of a black market.
The federal minimum wage at the.
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But this is a control or limit on how low a price can be charged for any commodity.
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.
Which of the following is an accurate statement about the consequence of a binding price floor.
Price floors and price ceilings.
Two things can happen when a price floor is implemented.
Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.
Final exam ch.
They don t face incentives to cut costs by using more efficient production methods because the high price offers them protection from lower cost competitors.
Consequences of price floors.
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