Final answer:
Governments implement price floors to protect producers by ensuring they receive a minimum price for their goods, incentivizing continued production of essential items such as dairy products and adhering to a free market philosophy. Minimum wage is a common example of a price floor.
Step-by-step explanation:
Price floors are implemented by governments as a type of price control to prevent prices from falling below a certain level. This is designed to ensure that producers, such as dairy farmers, earn enough profit to continue operating, thus maintaining the supply of essential goods like milk, cheese, and ice cream. Price floors are not meant to set an exact price but rather to set a minimum price limit, demonstrating a respect for the free market by allowing the actual prices to be determined through the negotiation process between buyers and sellers. An example of a price floor is the minimum wage, which is the minimum price an employer is legally required to pay a worker for an hour of labor.