Principles of Microeconomics / Unit 2 MIC 0123 short lesson, about 20 seconds
Price Floors
Captions available
The idea
A price floor set above equilibrium creates a surplus: at the legal price, sellers offer more than buyers want, and the price is not allowed to fall to clear it.
In practice
At a supported grain price, farmers grow more than buyers will take.
Where people slip
The surplus persists too, and somebody must absorb it: a government that buys it, or sellers who cannot sell.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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