Write a short note on Floor Price.
Dear student,
Floor price means minimum support price, it refers to a price above equilibrium price that is fixed by the Government that a seller should charge for its product. It benefits farmers or labours as their income rises with help of floor price. From consumers point of view it is ineffective, as they have to pay more to purchase a product, which reduces their purchase. It leads to a situation of excess supply, the excess stock is stored in order to ensure smooth supply of product in event of any calamity.
An example of Floor price is Minimum wages that is fixed to safeguard the interests of labours.
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Regards
Floor price means minimum support price, it refers to a price above equilibrium price that is fixed by the Government that a seller should charge for its product. It benefits farmers or labours as their income rises with help of floor price. From consumers point of view it is ineffective, as they have to pay more to purchase a product, which reduces their purchase. It leads to a situation of excess supply, the excess stock is stored in order to ensure smooth supply of product in event of any calamity.
An example of Floor price is Minimum wages that is fixed to safeguard the interests of labours.
Regards