Economics05 marksPrice floor and effects
Discuss the government intervention in the market through price floor, price ceiling and tax and effect.
Discuss the government intervention in the market through price floor, price ceiling and tax and effect. [5]
Definition: A price floor is a legally mandated minimum price below which a good cannot be sold. Effects: - Creates a binding price floor when set above equilibrium price - Results in excess supply (surplus) - quantity supplied exceeds quantity demanded - Prevents prices from falling to equilibri...