Minimum Price (Price Floor) ​

• What is a minimum price?:

  • Prices are not allowed to fall below a price floor set by law.  It is set above the equilibrium price. ​

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• What is a minimum price?

  • Prices are not allowed to fall below a price floor set by law.  It is set above the equilibrium price. ​

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• Where is the price floor set?

  above the equilibrium price
• A minimum price is where prices are?

  not allowed to fall below a price floor
• Why do governments impose minimum prices?:

  • Protect producers
  • Discourage the consumption of demerit goods
  • Reduce income inequality and protect workers in the labour market
• Why do Governments Impose Minimum Prices?

  • Protect producers
  • Discourage the consumption of demerit goods
  • Reduce income inequality and protect workers in the labour market
• What does minimum price create?

  excess supply