A price floor is a government-imposed minimum price that is set above the equilibrium price, ensuring that the market price cannot fall below this minimum. This is often used to protect producers, such as farmers, from prices that are too low.

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A Price Floor Is a

Question 40

Multiple Choice

A price floor is a

A) fixed point on the supply curve that represents the lowest price a producer will accept
B) fixed point on the demand curve that represents the lowest price a consumer will pay
C) minimum price set by the government that is positioned above the equilibrium price
D) maximum price set by the government that is positioned above the equilibrium price
E) maximum price set by the government that is positioned below the equilibrium price

Correct Answer: