An example of a price floor is: production costs minimum wage distribution costs market wage

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Giles

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24 July, 07:40

An example of a price floor is: production costs minimum wage distribution costs market wage

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Francis Gordon · Answer 1

A price floor was created by the government to stop the price of products from selling too low, so if an item is at the price floor, it is already at the lowest possible price it can go.

Production costs: Incorrect. The amount of money it takes to make a product has nothing to do with a price floor.

Minimum wage: Correct. Minimum wage is a prime example of a price floor. The government sets out the lowest possible amount someone can make, which can be a price floor as well.

Distribution costs: Incorrect. The amount of money it takes to distribute a product has nothing to do with a price floor.

Market wage: Incorrect. This is just a rate of which the labor is spread out along the market, not a price floor.