What are the effects of a price floor?

Graph on paper.

When the Government sets a price floor (ie a price below which a good cant be sold) new suppliers will want to enter the market. However, if the price floor is above the equilibrium point (if it's below it doesnt have any effect), there wont be enough demand for the product, compared to how much it's being produced. So there will be a surplus of good produced equal to the space Q.

NB
Answered by Nicola B. Economics tutor

3317 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How can a depreciation in the home currency impact the trade balance?


How many diagrams is it best to use in an extended essay?


What effects aggregate demand and how would it effect the price level of the economy?


I'm unsure how to structure my essay, which way is the best?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning