Final answer:
The government raises the price floors to protect farmers and stabilize their income against market fluctuations. Price floors ensure farmers are incentivized to continue producing essential goods and provide income security. These measures also demonstrate a balance between free-market principles and the need for government intervention in certain situations.
Step-by-step explanation:
The government would raise the price floors in agricultural markets primarily to protect farmers. This economic intervention ensures that farmers receive a minimum price for their products, which can help stabilize their income, particularly in times when market prices fluctuate significantly. By having a guaranteed minimum price, farmers are more likely to continue producing essential agricultural products such as milk, which is crucial for a country's food supply.
These price floors, also known as price supports, are a form of government policy to prevent the price of agricultural commodities from falling below a certain level, thereby providing income security for farmers. This is essential as farm prices can vary widely from year to year, and while farm incomes may be adequate on average, in some years they can be very low, thus requiring government action to prevent these swings and ensure the stability of the agricultural sector.
Price ceilings, on the other hand, are intended to protect consumers by preventing prices from rising above a certain level. This demonstrates the government's effort to balance market forces with the need to ensure the affordability of essential goods for consumers.