Define Business Price Floor

Price floor has been found to be of great importance in the labour wage market.

Define business price floor.

Limit beyond which a cost will not be allowed to fall. Minimum wage is an example of a wage floor and functions as a minimum price per hour that a worker must be paid as determined by federal and state governments. A lower limit set by a government on the price that can be charged for a product or service. Dictionary term of the day articles subjects businessdictionary.

A price floor is a government or group imposed price control or limit on how low a price can be charged for a product good commodity or service. By observation it has been found that lower price floors are ineffective. A price floor must be higher than the equilibrium price in order to be effective. Price floor is a price control typically set by the government that limits the minimum price a company is allows to charge for a product or service its aim is to increase companies interest in manufacturing the product and increase the overall supply in the market place.

Floors in wages. The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold. The lowest preconceived price that a seller will accept. Price floor is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.

Real life example of a price ceiling.