Answer:
For a price floor to be effective, the minimum price has to be higher than the equilibrium price. ... The most common example of a price floor is the minimum wage. This is the minimum price that employers can pay workers for their labor. The opposite of a price floor is a price ceiling.
Step-by-step explanation:
A price floor or a minimum price is a regulatory tool used by the government. More specifically, it is defined as an intervention to raise market prices if the government feels the price is too low. In this case, since the new price is higher, the producers benefit. For a price floor to be effective, the minimum price has to be higher than the equilibrium price.
For example, many governments intervene by establishing price floors to ensure that farmers make enough money by guaranteeing a minimum price that their goods can be sold for. The most common example of a price floor is the minimum wage. This is the minimum price that employers can pay workers for their labor.