Advantage Of Price Floor Small Business

Small businesses can be nimble and innovative.

Advantage of price floor small business.

Price floor are used to give producers a higher income. Many small business owners are experts in their fields before branching out and starting a business. Governments usually set up a price floor in order to ensure that the market price of a commodity does not fall below a level that would threaten the financial existence of producers of the commodity. A price floor is an established lower boundary on the price of a commodity in the market.

The vendor or supplier has an incentive to lower its price per ton. Some people think that bigger companies take advantage of small. Advantages of maximum prices. They are used to increase the income of farmers producing goods it is obvious in this situation that by incresaseing the price above equilibrum governemt is assisting the producers and not the consumers a higher price is going to mean a higher income for the producer.

Like price ceiling price floor is also a measure of price control imposed by the government. This may be important if the supplier has monopoly power to exploit consumers. It is legal minimum price set by the government on particular goods and services in order to prevent producers from being paid very less price. This control may be higher or lower than the equilibrium price that the market determines for demand and supply.

The aim is to reduce prices below the market equilibrium price. But this is a control or limit on how low a price can be charged for any commodity. The advantage is that they will lead to lower prices for consumers.