Define Business Price Floor

This control may be higher or lower than the equilibrium price that the market determines for demand and supply.

Define business price floor.

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. By observation it has been found that lower price floors are ineffective. The equilibrium price commonly called the market price is the price where economic forces such as supply and demand are balanced and in the absence of external. Dictionary term of the day articles subjects businessdictionary.

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. The lowest preconceived price that a seller will accept. Price floor has been found to be of great importance in the labour wage market. Limit beyond which a cost will not be allowed to fall.

Floors in wages. A lower limit set by a government on the price that can be charged for a product or service. 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. 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.

Definition of price floor.