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When does government intervene to fix minimum price of a commodity (Price floor) ?

Answer» <html><body><p><br/></p>Solution :Government resorts to price floor when the market equilibrium price is considered to be unremunerative for the producers which doesnot <a href="https://interviewquestions.tuteehub.com/tag/provide-607804" style="font-weight:bold;" target="_blank" title="Click to know more about PROVIDE">PROVIDE</a> incentives to the producers to expand their <a href="https://interviewquestions.tuteehub.com/tag/production-14556" style="font-weight:bold;" target="_blank" title="Click to know more about PRODUCTION">PRODUCTION</a>. Government in order to <a href="https://interviewquestions.tuteehub.com/tag/protect-1170661" style="font-weight:bold;" target="_blank" title="Click to know more about PROTECT">PROTECT</a> the interest of producers announces the minimum price of the commodity to provide reasonable prices to the producers or farmers for certain agricultural goods and increase their income. Unsold surplus of goods is bought by the government. In India food corporation of India on behalf of the government producers surplus of wheat and rice production <a href="https://interviewquestions.tuteehub.com/tag/created-7257327" style="font-weight:bold;" target="_blank" title="Click to know more about CREATED">CREATED</a> as a result of fixation of minimum <a href="https://interviewquestions.tuteehub.com/tag/support-1235361" style="font-weight:bold;" target="_blank" title="Click to know more about SUPPORT">SUPPORT</a> prices of wheat and rice.</body></html>


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