In order for a price floor to have an impact on a market it must be set below the equilibrium price.

Question

Quizplus · Accepted Answer

In order for a price floor to have an impact on a market, it must be set above the equilibrium price. This creates a situation where the minimum price is higher than what the market would naturally dictate, leading to excess supply (i.e. more products than buyers) and potentially economic inefficiency.

In Order for a Price Floor to Have an Impact