price floor

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price floor

The government set a price floor for milk to help dairy farmers.

Definition

Noun: A government-imposed minimum price that can be legally charged for a specific good or service. It is a type of price control set above the equilibrium market price to prevent the price from falling below a level deemed acceptable or necessary, often to support producers' incomes.

Usage

A "price floor" is established by a governing authority to ensure a minimum revenue for suppliers, such as farmers or laborers. It is typically discussed in economics, policy, and business contexts. - The primary purpose of a price floor is to protect producers from prices that are considered too low. - When a price floor is set above the market equilibrium, it often leads to a surplus of the good.

Examples
  • The government instituted a price floor for milk to ensure dairy farmers could cover their production costs.
  • Economists debated the effectiveness of the new price floor on wheat.
  • A binding price floor creates excess supply that the government may need to purchase.
Advanced Usage
  • "to set/establish/impose a price floor": The act of a government or regulatory body creating the minimum price.
  • "binding/non-binding price floor": A "binding" floor is set above the equilibrium price and affects the market. A "non-binding" floor is set below equilibrium and has no practical effect.
Variants and Related Words
  • Price Support (n): A broader term for government measures, which can include price floors or direct purchases, to maintain prices at a certain level.
  • Minimum Price (n): A general synonym for a price floor.
  • Price Ceiling (n): The opposite control; a government-imposed maximum price.
Synonyms
  • Minimum price
  • Price support (in a specific context)
  • Base price
Related Concepts
  • Market Equilibrium: The price at which quantity supplied equals quantity demanded, which a price floor disrupts if binding.
  • Surplus/Excess Supply: A common consequence of an effective price floor.
  • Subsidy: An alternative policy to support producers without directly setting a minimum price.
price floor

The government set a price floor for milk to help dairy farmers.

Noun
  1. floor below which prices are not allowed to fall
    • the government used price supports to maintain the price floor