Floor Price Investopedia

Floors in wages.

Floor price investopedia.

Price floors are used by the government to prevent prices from being too low. An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product. By observation it has been found that lower price floors are ineffective. Price floors are also used often in agriculture to try to protect farmers.

The most common price floor is the minimum wage the minimum price that can be payed for labor. 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. Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. Investopedia is part of the dotdash publishing family.

A price floor is the lowest legal price a commodity can be sold at. 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. The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold. Price floor has been found to be of great importance in the labour wage market.

More specifically it is defined as an intervention to raise market prices if the government feels the price is too low. The maximum level permissible in a financial transaction. Nounthe lowest price a price which cannot go any lower. The lowest preconceived price that a seller will accept.

A price floor or a minimum price is a regulatory tool used by the government.