Example Price Floor

This is established by the federal.

Example price floor. The minimum wage is a price floor set by the government in order to prevent exploitation of employees. Price floors are effective when set above the equilibrium price. Normally wages are determined by supply and demand in the labor market.

The federal minimum wage is as of 2015 7 25 per hour. A minimum wage law is the most common and easily recognizable example of a price floor. A price floor is a minimum price enforced in a market by a government or self imposed by a group.

A price floor is the other common government policy to manipulate supply and demand opposite from a price ceiling. In sectors where the equilibrium price determined by supply and demand of labor is below the minimum wage the level of the minimum wage acts as a price floor and the effect is to artificially raise the price of labor. It is applied throughout the states of america and currently it is set at 7 25 per hour.

A price floor means that the price of a good or service cannot go lower than the regulated floor. For example the equilibrium price for labor is 6 00 and the price floor is 7 25. It is illegal for companies to pay less than the minimum wage to the employees.

In this case the supply for employment is greater than the demand of jobs due to the price control that creates a surplus. The law indicates the least amount that particular individuals in different working classes should be paid on an hourly basis. A minimum wage may apply to a particular sector or all across the board.

The minimum wage is the price that employers pay for labor and a common example of a price floor. Examples of price floors. One example of the price floor is government wage law.