price floors

A price floor is a minimum price set by the government or a regulating authority for a good or service. Its purpose is to prevent prices from falling too low, which could harm producers. For example, a minimum wage is a type of price floor for labor. If set above the equilibrium market price, it can lead to surpluses—more supply than demand—potentially causing inefficiencies or unemployment. Price floors aim to protect producers or workers but can sometimes create unintended market distortions if set improperly.