Question

What is floor price?

What is meant by floor price?

Answer 1

• 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.’ Floor price benefits the supplier of a good or service.
• A floor price benefits suppliers of goods or services. The minimum support price (or floor price) ensures manufacturers receive a fair price for their goods. The floor price encourages producers to create more by guaranteeing a minimum appropriate price for their product. In India, the government sets minimum pricing for agricultural items like wheat and rice, as well as minimum wages for workers.