The Floor Is Basic Economics

A price floor is the lowest legal price a commodity can be sold at.

The floor is basic economics. The most common price floor is the minimum wage the minimum price that can be payed for labor. There is no reason to replace it right away. Price floors are used by the government to prevent prices from being too low. Basic economics is a citizen s guide to economics for those who want to understand how the economy works but have no interest in jargon or equations.

Minimum wage is an example of a wage floor and functions as a minimum price per hour that a worker must be paid as determined by federal and state governments. The floor system has worked well so far in re normalizing the fed s policies after the extended period of exceptionally low interest rates made necessary by the financial crisis. Floors in wages. The four basic economic questions are.

Price floors are also used often in. What goods to produce how to use resources in the production process who receives the finished goods and when to produce the goods. Answering these four questions is essential for an economy to function properly.