For a price floor to be effective, it must be set above the equilibrium price. If it's not above equilibrium, then the market won't sell below equilibrium and the price floor will be irrelevant.
Drawing a price floor is simple. Simply draw a straight, horizontal line at the price floor level. This graph shows a price floor at $3.00. You'll notice that the price floor is above the equilibrium price, which is $2.00 in this example.
A few crazy things start to happen when a price floor is set. First of all, the price floor has raised the price above what it was at equilibrium, so the demanders (consumers) aren't willing to buy as much quantity. The demanders will purchase the quantity where the quantity demanded is equal to the price floor, or where the demand curve intersects the price floor line. On the other hand, since the price is higher than what it would be at equilibrium, the suppliers (producers) are willing to supply more than the equilibrium quantity. They will supply where their marginal cost is equal to the price floor, or where the supply curve intersects the price floor line.
As you might have guessed, this creates a problem. There is less quantity demanded (consumed) than quantity supplied (produced). This is called a surplus. If the surplus is allowed to be in the market then the price would actually drop below the equilibrium. In order to prevent this the government must step in. The government has a few options:
Although some of those ideas may sound stupid, the US government has done them. In the end, a price floor hurts society more than it helps. It may help farmers or the few workers that get to work for minimum wage, but it only helps those people by hurting everyone else. Price floors cause a deadweight welfare loss.
A deadweight welfare loss occurs whenever there is a difference between the price the marginal demander is willing to pay and the equilibrium price. The deadweight welfare loss is the loss of consumer and producer surplus. In other words, any time a regulation is put into place that moves the market away from equilibrium, beneficial transactions that would have occured can no longer take place. In the case of a price floor, the deadweight welfare loss is shown by a triangle on the left side of the equilibrium point, like in the graph. The area of the triangle is the amount of money that society loses.
To Promotion the producer of assist to enhance production and inshore the availability of product in the market to reduce the dependency on foreign market.
Economic Effiency Economic Freedom Economic Security Economic Equity Economic growth and Innovation
An economic growth_______ is a time of fast economic growth
traditional economic system command economic system market economic system
Economic growth is necessary for economic development but not a sufficient proof of economic development. The improvement of people's living condition is a greater assessment of economic development.
To Promotion the producer of assist to enhance production and inshore the availability of product in the market to reduce the dependency on foreign market.
1. The New Deal provided an economic floor. This renewed confidence in the future and revived faith in democracy.
Pennsylvania Tourism Office Dept. of Community and Economic Development 4th floor Commonwealth Keystone Building 400 north street Harrisburg PA 17120
What in America is called the 'first floor' is called the 'ground floor' in Britain. The floor immediately above that is the 'first floor', what Americans would call the 'second floor'.
it means mezzanine floor, a floor which is between the ground floor and the first floor.
No, the word "floor" is not an adverb.The word "floor" is a noun ("the floor was yellow") and a verb ("I will floor him if he comes near me").
Economic Effiency Economic Freedom Economic Security Economic Equity Economic growth and Innovation
a floor
Floor is sloped toward floor drain for draining. Floor cleanout is level with floor and is used to clean out drain line.
If you are talking about a house, the attic would be on the third floor as you have a ground floor (first floor), then a second floor (upstairs) and then a third floor (the attic), However if it was a bungalow, it would be on the second floor because bungalow's don't have an upstairs.
It created economic problems .
you first have to get rubber and glue it on your floor and you have a rubber floor