Floor Price Example

A minimum wage law is the most common and easily recognizable example of a price floor.

Floor price example. An unintended consequence may be an. A price floor means that the price of a good or service cannot go lower than the regulated floor. Price floors are effective when set above the equilibrium price.

For example the equilibrium price for labor is 6 00 and the price floor is 7 25. Any employer that pays their employees less than the specified amounts can be prosecuted for a breach of minimum wage laws. The federal minimum wage is as of 2015 7 25 per hour.

For example the uk government set the price floor in the labor market for workers above the age of 25 at 7 83 per hour and for workers between the ages of 21 and 24 at 7 38 per hour. Minimum wage is an example of a wage floor and functions as a minimum price per hour that a worker must be paid as determined by federal and state governments. A price floor is a minimum price enforced in a market by a government or self imposed by a group.

This is established by the federal. However other price floors exist in any sector that the government is trying to protect such as agricultural goods or other sensitive industries. It tends to create a market surplus.