Question

Differentiate between price ceiling and floor price.

Answer 1

Sr. No.	Points	Price ceiling	Floor price
1.	Definition	Many a time, the government fixes the maximum price in order to freeze the price of a particular commodity. This maximum permissible price is known as a 'price ceiling'.	Sometimes the government may legally fix the minimum price at which the sellers may sell a particular good or service. Such a price is known as a 'floor price' or 'minimum support price'.
2.	Purpose	To protect consumers from high prices by making goods affordable.	To protect producers by ensuring they receive a fair or minimum price.
3.	Legal Status	Makes it illegal to charge more than the fixed maximum price.	Makes it illegal to sell below the fixed minimum price.
4.	Diagram