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what are the effects of 'price-floor' (Minimum Price Ceiling) on the market of a good? Use diagram. |
Answer» Solution :When GOVERNMENT imposes lower limit on a price that may be charged for a particular good or service, it is CALLED Minimum Price Ceiling. e.g. price `OP_(1)`.At this price, the producers are willing to supply `P_(1)B" or "(OQ_(2))`, while consumers demand only `P_(1)A(= OQ_(1))`. Unable to sell. all they want to sell, the producers may try to illegally sell below the minimum price. 
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