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.

Noun

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