Question

An example of price floor is a. minimum wages b. rent controls in new york c. both a and b d. none of the above

Answer 1

Option c. Both a and b are right as

a. Minimum wages and b. rent control in New York is an example of a price floor.

What is Price Floor?

A fixed lower limit on a commodity's market price is known as a price floor. In order to prevent a commodity's market price from falling too low and endangering the producers' ability to make a living, governments typically create a price floor.

Types of Price Floor

Price floors are classified into two types:

• A non-binding price floor is one that is lower than the current market price.
• A binding price floor is one that is higher than the prevailing market price.

Price floors can be classified into two extremes:

• A price floor of infinity is similar to making the exchange or sale of the commodity unlawful.
• A non-inclusive price floor of zero can be thought of as a requirement that the product not be given away for free.

Therefore, Option c. Stating both options a. and b. are correct examples of Price Floor is the right answer.

For more information on Price Floor, refer to the following link:

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