Question

What is a negative effect of a price floor?

Answer 1

The following are the negative impact of a price floor:

1. If the price floor is set above the market equilibrium price, then supply surplus can be seen in the market.
2. Setting minimum wages above the market price will result in many employees being left out of the job thus creating unemployment.

Also read:

• Difference Between Price Ceiling and Price Floor
• Market Equilibrium

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