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Price floor definition economics quizlet.
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.
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Price floor has been found to be of great importance in the labour wage market.
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They are usually implemented as a means of direct economic intervention to manage the affordability.
Price floors and price ceilings.
Price controls are government mandated legal minimum or maximum prices set for specified goods.
Productive inefficiency the high price allows inefficient firms with high costs of production to stay in buisness.
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Like price ceiling price floor is also a measure of price control imposed by the government.
A price floor is the lowest legal price a commodity can be sold at.
The most common price floor is the minimum wage the minimum price that can be payed for labor.
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But this is a control or limit on how low a price can be charged for any commodity.
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Consequences of price floors.
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Start studying economics chapter 6 price.
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.
Price floors are also used often in agriculture to try to protect farmers.
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.
